Articles / Alternative Dispute Resolution
Mediation Privilege: Grubaugh V. Blomo County Of Maricopa Abc
Grubaugh addresses the limits of mediation confidentiality, and highlights the split among jurisdictions that allow exceptions to the privilege with respect to legal malpractice cases and those that don’t.
In Grubaugh, the plaintiff claimed that her former attorneys provided “substandard legal advice. . . during a family court mediation,” and claimed damages as a result of that poor advice. Her prior attorneys (the defendants) argued that the entire mediation process is privileged under Arizona law, hence communications allegedly made during and after such process related to the mediation cannot be used to support a legal malpractice claim. As a result, they argue, Grubaugh’s complaint should be dismissed.
Before addressing the Arizona Appellate Court’s opinion, it is important to be clear as to what was at issue. There was no claim that a confidentiality agreement (often an express agreement signed by all participants to a mediation) was breached or should be set aside. Rather, at issue was the applicability and scope of Arizona’s mediation privilege statute, which provides:
“The mediation process is confidential. Communications made, materials created for or used and acts occurring during a mediation are confidential and may not be discovered or admitted into evidence unless one of [four] exceptions [are] met”
The plaintiff did not assert that one of the applicable exceptions applied. Instead, she argued that by filing the legal malpractice action against her former counsel she waived the privilege, hence advice allegedly provided during and after the mediation could be used to support her law suit. The trial court agreed and permitted the action to proceed. The defendant lawyers appealed, and the Arizona appellate court reversed.
Explaining its decision, the Court differentiated mediation privilege in Arizona from attorney-client privilege.
The mediation process privilege, however, differs from the attorney-client privilege, which may be impliedly waived. [citation omitted]. The attorney-client privilege originated at common law and was subsequently codified by the Arizona legislature. At common law, the privilege was impliedly waived when a litigant’s “course of conduct [was] inconsistent with the observance of the privilege.” [citation omitted]
In contrast to the attorney-client privilege, Arizona’s mediation process privilege has no common law origin. It was created entirely by the legislature. Therefore, this court must rely upon the language of the statute to determine its meaning. Unlike waiver of the attorney-client privilege under the statute and common law, the statutory waiver provisions of the mediation process privilege are specific and exclusive [citation omitted].
Finding no applicable waiver under the statute, the Arizona Appellate Court held that the mediation privilege applied and therefore the alleged “substandard” advice could not be used to support plaintiff’s complaint. Accordingly, the case was dismissed.
I present the case for two reasons: First, it sets out the important lesson that mediation privilege is a creature of statute and not common law. Second, as highlighted in an American Bar Association article describing the case, there is a split among the states regarding the scope of mediation confidentiality and when/how mediation disclosures may be revealed. Bottom line: know the statutes governing the mediations you conduct.
The full opinion, Grubaugh V. Blomo County Of Maricopa Abc
Pamela Sakowicz Menaker, Litigation News, March 16, 2016 “Mediation Communications Inadmissible in Attorney Malpractice Suit”
Yukos US$ 50 Billion Award Reversed: The Russian Federation v Yukos Universal Limited
For those of you who are not familiar with the case, the Yukos litigation is one of the biggest disputes in the arbitration world. While the case is too complex and its history too long to describe properly in this Newsletter, suffice it to say that it comprised a multi-year hearing, a multi-million-dollar arbitration fee, and involved several of the world’s leading arbitration practitioners. The final result of the arbitration was a finding that the arbitration tribunal had jurisdiction to arbitrate the dispute (an issue vigorously contested), and a finding against the Russian Federation and award in favor of Yukos in the amount of US$ 50 Billion. Yes, that’s billion with a “B.”
Many arbitration practitioners were deeply troubled by reports of events that occurred during the proceedings and many of the rulings made during the arbitration. Therefore, Albert Jan van den Berg (lead counsel for Russia) not surprisingly stated upon learning of the Dutch Court’s ruling:
“If the Yukos awards had been held valid and enforceable, the integrity and credibility of investment arbitration would have been seriously jeopardised,”
Also not surprising, Tim Osborne, director of GML (the company that indirectly owns the majority of Yukos’s shares), stated:
“We fully stand by the unanimous awards received in 2014 on the politically motivated destruction of Yukos. We will appeal the surprise decision by The Hague court and have full faith that the rule of law and justice will ultimately prevail.”
Emmanuel Gaillard, head of international arbitration at Shearman & Sterling and lead counsel for the shareholders in the arbitration, stated:
“The arbitral tribunal was composed of arbitrators of the highest calibre who were unanimous in their reasoning. I am confident that today’s decision will be reversed on appeal.”
The saga will continue.
Full text of the Hague District Court’s Opinion:
Alison Ross, Global Arbitration Review, “US$50 Billion Yukos awards set aside in The Hague,” April 20, 206
Arbitration Vacatur: NFL v Tom Brady
American football fans are all familiar with the story: prior to the start of the AFC championship game in January 2015, the game balls to be used by New England Patriots’ quarterback Tom Brady mysteriously deflated to an air-pressure more to the liking of Brady; those of its opponent suffered no air pressure loss. Charges of cheating were made, and the NFL investigated. Following an investigation, the NFL suspended Brady. He requested arbitration, and the NFL commissioner, Roger Goodell, served as arbitrator and conducted a hearing. Following the hearing, Goodell confirmed the suspension.
Brady challenged the arbitration award in the Federal District Court of New York, and the District Court vacated the award “reasoning that Brady lacked notice that his conduct was prohibited and punishable by suspension, and that the manner in which the proceedings were conducted deprived him of fundamental fairness.” Last week, the Second Circuit Court of Appeals reversed, reinstating the suspension.
As much as I would enjoy ranting on the ethics of the New England Patriots team, I present the decision not because it vindicates my personal belief that Brady should be punished, but because of what the Second Circuit says about arbitration and when arbitration awards may be vacated.
The basic principle driving both our analysis and our conclusion is well established: a federal court’s review of labor arbitration awards is narrowly circumscribed and highly deferential – indeed, among the most deferential in the law. Our role is not to determine for ourselves whether Brady participated in a scheme to deflate footballs or whether the suspension imposed by the Commissioner should have been for three games or five games or none at all. Nor is it our role to second-guess the arbitrator’s procedural rulings. Our obligation is limited to determining whether the arbitration proceedings and award meet the minimum legal standards established by the Labor Management Relations Act [citation omitted] We must simply ensure that the arbitrator was “even arguably construing or applying the contract and acting within the scope of his authority” and did not “ignore the plain language of the contract.” [citation omitted] These standards do not require perfection in arbitration awards. Rather, they dictate that even if an arbitrator makes mistakes of fact or law, we may not disturb an award so long as he acted within the bounds of this bargained-for authority.
OK – I can’t resist. I have to rant just a bit and relate the following facts from the opinion:
In addition to videotape evidence and witness interviews, the investigation team examined text messages exchanged between [Jim] McNally and [John] Jastremski [“two Patriots equipment officials”] in the months leading up to the AFC Championship Game. In the messages, the two discussed Brady’s stated preference for less-inflated footballs. McNally also referred to himself as “the deflator” and quipped that he was “not going to ESPN. . .yet,” and Jastremski agreed to provide McNally with a “needle” in exchange for “cash,” “newkicks,” and memorabilia autographed by Brady. [citation omitted]
Significantly, the Report also found that, after more than six months of not communicating by phone or message, Brady and Jastremski spoke on the phone for approximately 25 minutes on January 19, the day the investigation was announced. This unusual pattern of communication continued over the next two days. Brady had also taken the “unprecedented step” on January 19 of inviting Jastremski to the quarterback room, and had sent Jastremski several text messages that day that were apparently designed to calm him. The Report added that the investigation had been impaired by Brady’s refusal “to make available any documents or electronic information (including text messages and emails), notwithstanding an offer by the investigators to allow Brady’s counsel to screen the production.
Shortly before the hearing, it was revealed that on March 6 – the same day that he was to be interviewed by the Wells investigative team – Brady had “instructed his assistant to destroy the cellphone that he had been using since early November 2014, a period that included the AFC Championship Game and the initial weeks of the subsequent investigation,” despite knowing that the investigators had requested information from the phone several weeks before. [citation omitted] Although Brady testified that he was following his ordinary practice of disposing of old cell phones in order to protect his personal privacy, he had nonetheless retained phones that he had used before and after the relevant time frame.
Full text of the opinion in National Football League v Tom Brady