The rule mandating confidentiality in mediation is stated differently in various statutes and Court rules, but they are uniform in purpose and effect. Any document prepared, or communication made, by parties, their counsel, or the neutral, for, during, or in connection with the mediation proceeding may not be disclosed outside its confines by any participant (or its representative). There are exceptions to this rule but they are few and narrowly drawn. (See, e.g., the Commercial Division, Supreme Court, New York County Rules and Procedures of the Alternative Dispute Mediation Program, Rule 8(b)) (e.g., disclosure limited to prevent an illegal act, or report unethical conduct to a proper authority, or when disclosure is required by law or rule.)
The purpose of this confidentially rule is to encourage the free exchange of information: “… the success of mediation depends largely on the willingness of the parties to freely disclose their intentions, desires, and the strengths and weaknesses of their case; and upon the ability of the mediator to maintain a neutral position while carefully preserving the confidences that have been revealed…” In re County of Los Angeles, 223 F.3d 990, 993 (9th Cir. 2000) (quoting Poly Software Int’l, Inc. v. Su, 880 F.Supp. 1487, 1494 (D.Utah 1995)); “… confidentiality serves to protect the mediation program from being used as a discovery tool for creative attorneys.” In re Anonymous, 283 F.3d 627, 636 (4th Cir. 2002).
Courts have noted that “where participation is mandatory and the mediation is directed and sanctioned by the [c]ourt, ‘the argument for protecting confidential communications may be even stronger because participants are often assured that all discussions and documents related to the proceeding will be protected from forced disclosure.’ [citing cases]” Id. at 637.
The consequences for violating this confidentiality rule can be dire, ranging from monetary fines (e.g., Bernard v. Galen Group, 901 F.Sup. 778 (SDNY 1995), to outright dismissal of a claim or defense (e.g., Parangino v. Barnett Bank, 690 So. 2d 725 (Fla. Dist. Ct. App. 1997); Hand v. Walmart Valley Sailing Club, No. 11-3228 (10th Circ. 2012). As former District Judge Chin held in Bernard, “if participants cannot rely on the confidential treatment of everything that transpires during [mediations] then counsel of necessity will feel constrained to conduct themselves in a cautious, tight-lipped, non-committal manner more suitable to poker players in a high-stakes game than to adversaries attempting to arrive at a just resolution of a civil dispute.” Id. at 784.
The confidentiality rule is invariably set forth in a rule or administrative order of the Court in which the action is pending. It is also often embodied in the Court order directing the mediation, or in a stipulation signed by the parties and all counsel prior to the mediation, as the U.S.D.C., E.D.N.Y. ADR Program requires before the commencement of any mediation. This subject should also be addressed in any underlying written agreement to mediate that the parties should execute.
Parties are, of course, charged until knowing and complying with Court orders and rules. For that reason, a party who seeks to argue that a violation was unwitting, or that there was no awareness of the rule, carries a heavy burden. And even if truly unaware, it would be a factor only in mitigation in determining the severity of the penalty.
Given the importance of confidentiality to the process, it is incumbent upon the mediator to raise and emphasize this subject in the opening segment of a mediation session. All participants should be reminded that strict confidentiality applies, the practical reasons for the rule, and the severe consequences attendant upon any violation. Proceeding in this manner emphasizes the difference between mediation and any other court hearing, and reassures the parties that they may and should speak freely in exploring a resolution of the case.