Bricker & Eckler LLP: Communications Made During Mediation are Confidential (and Now They are Privileged)!

Communications Made During Mediation are Confidential
(and Now They are Privileged!)

Reprinted from April 2006 ohioconstructionlaw.com

Last month we said we would start looking at rules that govern mediation. At the time, we did not know of a case about to be reported from the Ohio Court of Appeals that touches upon these rules. Although the case deals with a statute that has since been repealed, it is instructive about how courts jealously guard the confidential nature of the mediation process. The courts must continue to do so under the newly enacted Uniform Mediation Act (called the “UMA”) if mediation is to provide any relief to the parties and the court system.

In November 2003, I wrote an article in ADR Corner about the UMA. At the time, Ohio Revised Code § 2317.023, which made certain communications during mediation confidential, was still in effect, but with the adoption of the UMA, § 2317.023 would be repealed. This article looked at the differences between that section and the UMA. To have a better understanding of the confidential nature of mediation communications, you might want to revisit that article before reading on here.

The cornerstone of any effective and successful mediation is the confidential nature of the process—the feature that allows a party to speak freely about his or her dispute without fear of the other party using what is said in some other proceedings. Let’s take a look at the case of O’Donnell Construction Company v. Stewart (2006), 2006 Ohio App. LEXIS 1686, a decision from Cuyahoga County on April 13, 2006. We must recognize that it addresses a statute (R. C. § 2317.023) no longer in existence, but also realize that the statutory scheme that replaced it probably provides even stronger protection for the mediation process and the parties.

The issue in O’Donnell relevant to this article was this: can a mediator be compelled to testify about communications made during the course of mediation? Recognizing that each case in which this question is asked will be fact-intensive, I am prepared to say that the court in O’Donnell reached the same conclusion as will be reached in 99% of all cases that ask that same question, and that answer is a resounding NO!

In 2003, the Stewarts entered into a contract with O’Donnell for the construction of the United Martial Arts Center. Late in 2003, the Stewarts issued a stop work order and prevented O’Donnell from completing any additional work. The Stewarts also stopped paying O’Donnell, claiming defective construction and breach of contract. In turn, O’Donnell claimed the Stewarts breached the contract and owed a balance of approximately $127,000.

The Stewarts and O’Donnell engaged in mediation as required by their contract. During the course of the mediation, the mediator met with the parties jointly but then conducted most of the balance of the mediation by meeting separately with the parties. The parties eventually entered into a mutual settlement agreement requiring O’Donnell to deliver materials to the job site and requiring the Stewarts to pay O’Donnell $100,000. The Stewarts never paid O’Donnell, instead claiming that O’Donnell made false statements to the mediator and therefore fraudulently induced them to enter into the settlement agreement. O’Donnell filed a lawsuit to enforce the settlement agreement. The Stewarts countersued O’Donnell and asked the court to set aside the settlement agreement based on fraudulent statements made by O’Donnell at the mediation.

To prove their case, the Stewarts sought the testimony of the mediator at a deposition as to statements made during the mediation. O’Donnell objected to the deposition on the grounds that R. C. § 2317.023 makes statements during mediation confidential and that the mediator cannot be compelled to testify as to what was said by any party during mediation. The trial court, however, granted the Stewarts’ motion to compel the testimony of the mediator, and O’Donnell appealed.

Turning to Ohio Revised Code § 2317.023 (which has since been replaced by the UMA), the court first determined whether the request concerned mediation communications. The Stewarts wanted the mediator to testify about the information relayed to him by both the Stewarts and O’Donnell, while O’Donnell sought to prevent disclosure of any information obtained during the mediation. According to the Court of Appeals, this very clearly fell within the statutory definition of “mediation communication” and was therefore confidential under R.C. § 2317.023(B).

The Stewarts correctly pointed out to the court that the statute also provided exceptions. Again looking to the statute as it existed at the time the case reached the court, the court found that the communication sought by the Stewarts did not meet any of the exceptions: all parties did not consent to the disclosure, nor was there a hearing to determine if disclosure was necessary to prevent a manifest injustice. Accordingly, the appellate court ruled that the trial court erred when it ordered the testimony of the mediator. The communications made during the mediation were not subject to disclosure, and the mediator could not be compelled to testify as to what was said by any party during the mediation.

Any mediation occurring prior to enactment of the UMA on October 29, 2005, will still be subject to R. C. § 2317.023 and the protection afforded is similar. If a mediation occurred on October 29, 2005 or later, it will be subject to the provisions of Chapter 2710 of the Ohio Revised Code, the UMA.

How could the Stewarts have protected themselves in this process? One exception to the confidentiality under R. C. § 2317.023 was if the communication is embodied in a settlement agreement. If the Stewarts were relying on factual representations made by O’Donnell, they should have recited them in the settlement agreement. They also could have sought an agreement with the mediator and O’Donnell that either party could call the mediator as a witness in the event of a dispute over the mediated agreement. It is doubtful that the mediator would have signed such an agreement, but it would have been worth a try.

The lesson to learn from this case is that mediation is fast becoming a sacred ground in the legal world. It resolves a lot of disputes that might otherwise encumber an already overburdened justice system. My recommendation is that you not bother trying to get the testimony from a mediator to attack an agreement you made in mediation. Instead, make sure everything you are relying on is spelled out in the settlement agreement, or forever hold your peace.