Court of Appeals Addresses Confidentiality
In re Anonymous, No. 01-9543
Cite: 283 F.3d. 627 (4th Cir. 2002)
Editor's Note: While this case deals with the confidentiality provision of the U.S. Circuit Court of Appeals for the Fourth Circuit Rule 33 and is not applicable to Virginia state court-referred mediations, the analysis of the court is useful in understanding how a court might weigh the value of preserving confidentiality of mediation against competing public policy interests.
In a recent decision by the United States Court of Appeals for the Fourth Circuit, In re Anonymous, the court discusses the scope of the confidentiality of mediation proceedings. The case concerned a disagreement over the payment of litigation expenses, which arose between an attorney and his client following a successful court-sponsored mediation. The client retained new counsel, and the expense dispute was brought before an arbitral panel sponsored by the Virginia State Bar (VSB). In an effort to resolve issues regarding the attorney fees, information from the mediation was disclosed to the VSB panel in a confidential forum. The participants also requested that the mediator disclose information to help settle the matter.
All participants in the initial mediation had agreed, however, to the confidentiality provision of US Ct. of App. 4th Cir. Rule 33 (Rule 33). The rule prohibits the disclosure of any information introduced during mediation proceedings to the judges deciding the appeal or to any other person outside the mediation program participants. Confidentiality is required of all participants in the mediation proceedings. All statements, documents, and discussions in such proceedings shall be kept confidential. The mediator, attorneys, and other participants in the mediation shall not disclose such statements, documents, or discussions without prior approval of the Standing Panel on Attorney Discipline. As a result of Rule 33's confidentiality provision, the participants were not at liberty to divulge details about the initial mediation to the VSB panel when they did so. The Standing Panel on Attorney Discipline (The Panel) had to review, therefore, the severity of the disclosures made before the VSB. The Panel did find that the parties violated Rule 33, but also that those violations were not severe enough to warrant imposing sanctions against the offenders. The Panel further determined that, in order to preserve the integrity of the role of the mediator, the mediator is not at liberty to share any information about a mediation in subsequent proceedings.
In finding that there was a breach of Rule 33, the Court of Appeals reiterated the following implications of the Rule: 1) Even statements and information that are not central to the mediated dispute are protected by Rule 33's confidentiality requirement. 2) Submissions made to a confidential forum are also subject to the confidentiality requirement. 3) The term "parties" in Rule 33 refers to any person in attendance at the mediation conference. All attendants, regardless of the extent of their participation in the proceedings, are bound by the confidentiality requirements and are prohibited from disclosing any information pertaining to the mediation proceeding. 4) The confidentiality requirement does not deny participants the right to resolve disputes that might arise from the mediation because Rule 33 allows for requests of waivers of the confidentiality requirement in circumstances when disclosure would be the only way to resolve a dispute. 5) Conversations which take place subsequent to the conclusion of the actual mediation are still subject to the confidentiality requirement. The court recognized that, due to the nature of mediation, settlement conversations might take place outside of the actual mediation proceeding. These conversations are also subject to the confidentiality requirement until the mediated dispute has either been dismissed or otherwise removed by the office of the circuit court mediator.
In determining whether sanctions were warranted for the violation of Rule 33, the following questions were analyzed: 1) To what extent and how clearly did the mediator explain the confidentiality rules to the participants? 2) Did the parties execute a confidentiality agreement? 3) What part did bad faith play in the breach of confidentiality? 4) How severely did the disclosure affect the parties and was that effect negative? 5) How did the disclosure affect the mediation program?
In evaluating these factors, the court determined that the parties in the expense dispute did not act with malice and did not intend to violate Rule 33. The court notes that counsel had some basis to believe that his disclosures did not breach confidentiality in that the Model Rules of Professional Conduct provide an exception to confidentiality for disclosures of confidential client information where the disclosures are for the purpose of establishing an attorney's entitlement to compensation. Furthermore, the court found that the disclosures had no negative impact on the mediated dispute and, because the disclosures were made to a non-public, confidential forum, any adverse impact on the mediation program was slight. Consequently, the court could find no basis for imposing sanctions on the breaching parties.
The court next considered whether the Panel should grant a confidentiality waiver to the participants in this matter. The appropriateness of such a waiver depended upon an examination of the relevant interests protected by non-disclosure. The assurance of confidentiality is essential to the integrity and success of the court's mediation program. On the other hand, under certain circumstances, nondisclosure may result in the loss of information to the public and the justice system. Thus, in determining whether a waiver is appropriate, the court must balance the public interest in protecting confidentiality against the manifest injustice that may result from nondisclosure As In re Anonymous addressed client reimbursement of attorney expenses, the court found that settlement information from the mediation was critical to clarify and resolve the dispute. The court also noted that any harm that resulted from disclosure would be limited because the disclosures would be made to a VSB nonpublic, confidential forum. The court, therefore, allowed the disclosure of the following material: 1) conversations that took place during the mediation about the expense dispute and the notes which corroborate those conversations, and 2) the settlement agreement and notes which pertain to that agreement, but only to the extent that such materials explain or relate to the disbursement of the settlement funds. The parties were also obligated to obtain from the VSB its written agreement to abide by Rule 33's confidentiality requirement.
The court declined, however, to permit mediators to divulge information or notes pertaining to the mediation process in subsequent dispute resolution proceedings because of the possibility that such disclosures would promote a sense of bias in future mediation proceedings as well as the possibility that it might encourage attorneys to use mediators as a discovery tool. In In re Anonymous, this decision was further supported by the fact that the party requesting disclosure failed to prove that disclosures from the mediator were essential to resolve the expense dispute, as well as by the fact that the opposing party expressly objected to the mediator's involvement.
The In re Anonymous decision emphasizes the court's position that mediation is most effective when there is a presumption that the proceeding will be completely confidential. The opinion acknowledges that there are exceptions to this rule, but that they are limited in order to preserve the integrity of the mediation process.
(Archana Jesudian is serving as a summer intern with the Office of the Executive Secretary. She is a first-year law student at Marshall-Wythe School of Law.)
This page last modified: December 9, 2002