By Abby Tolchinsky and Ellie Wertheim
November 13, 2007
Our most recent column (New York Law Journal, Sept. 7, 2007, “When Neutral Mediator May Be Advocate for One Party,” at p. 3), touched on the value of confidentiality provisions for mediators and for parties to mediation.
Specifically, we explained how these provisions foster an atmosphere conducive to the open exchange of information and discussion necessary for settlement. Confidentiality protections are not without limitations, as outlined in the Administrative Dispute Resolution Act (ADRA), 5 U.S.C.A. 574 (1996), which balances openness in the mediation process against the need for discovery should subsequent litigation occur.
Troubling ‘Hauzinger’ Case
Since that prior column, the Fourth Department issued a troubling decision directly on point: Hauzinger v. Hauzinger, 43 AD3d 1289, 842 NYS2d 646 (4th Dept. 2007 ). Given the paucity of other New York State case law in this area, Hauzinger significantly alters the mediation landscape, at a minimum with respect to matrimonial practice.
Hauzinger involved a matrimonial action in which the parties mediated and signed a separation agreement without either spouse obtaining independent attorney review. The husband/plaintiff hired counsel with the intent of converting the legal separation agreement into a final divorce judgment, in accordance with Domestic Relations Law §170(6). In contesting the husband’s motion and seeking to set aside the separation agreement, wife’s counsel subpoenaed the mediator as a nonparty witness in order to “establish the circumstances surrounding the execution of the separation agreement.” Hauzinger, at 646.
It is not clear, however, from the decision, whether the wife’s attorney was seeking to clarify what had actually occurred during the mediation negotiations or whether the questions for the mediator were regarding the intended meaning of the language contained in the separation agreement, or, perhaps, both.
Regardless, the mediator moved to quash the subpoena. The Fourth Department, on appeal, affirmed the lower court’s holding compelling the mediator to testify at deposition, stating that it was the court’s obligation to determine “whether the terms of the separation agreement were ‘fair and reasonable at the time of the making of the agreement.'” Hauzinger, at 646, citing DRL §236[B].
As part of his attempt to quash the subpoena, appellant mediator argued various points, all of which were rejected by the court, albeit without explanation. The first argument, on basic principles of contract law, contended that, “The confidentiality provisions of the mediation agreement and the agreement not to subpoena the mediator are clear and unequivocal and should be specifically enforced.”1 Similar agreements are used routinely in the mediation process because they help to ensure the open negotiations that are the essence of participating in this method of conflict resolution. The mediator further explained that the evidence sought could be obtained from other independent sources. He also described the damaging effect on mediation were mediators, as a matter of course, called to provide testimony. The nature of mediation would shift if parties suspected that their statements, written or verbal, could be used against them in a subsequent proceeding. Moreover, were the specter of discovery ever-present, parties to mediation would be reluctant to deal with one another directly and honestly in discussing various options for settling their conflict.
Confidentiality agreements, such as the one in this case, have been upheld, both as a matter of contract law and as a matter of public policy, with regard to protecting the integrity of the mediation process. Indeed, a basic tenet of mediation is parties’ self-determination to craft individualized settlement agreements. In fact, participants to mediation are often attracted to the opportunity to direct their own outcomes, using the law as a frame of reference rather than as a controlling factor. Just as parties can contract their own lasting agreements, courts should respect their self-determination to contract to keep the process confidential.
Next, the mediator made the point that negotiations that take place in mediation are, by definition, settlement negotiations; thereby as a matter of law, they are confidential with extreme and rare exception.2 By respecting and thereby upholding confidentiality agreements, courts facilitate out-of-court settlements, avoiding protracted litigation. The Hauzinger court does not address the protections the federal rules provide to settlement negotiations. Nor does the court provide guidance as to whether mediation negotiations are, in fact, settlement negotiations for the purposes of the Federal Rules of Evidence.
The final point the mediator raised was that the defendant wife failed to show why the mediator’s deposition would be material and necessary to the action to set aside the separation agreement. Again, the court does not explain what specific information is sought by compelling the mediator’s deposition. So, the lack of limitation to the testimony sought, alongside the lack of explanation as to why the testimony is necessary and unobtainable from other sources, leaves practitioners deeply concerned that the essence of the mediation process – open and confidential negotiations – is threatened. Because there is little case law in any other department on point, and because this case does not provide limitations for upending confidentiality agreements between mediators and their clients, practitioners (attorneys and mediators) are left grappling as to the practical effects of this sweeping decision and how best to advise their clients.
What’s more, this decision creates a deterrent for parties otherwise inclined to participate in this alternative to litigation. Up to now, parties have had the freedom to settle conflicts on terms they see fit, confident in the finality and predictability of those agreements. Surely it is not the Hauzinger court’s intent to have parties successfully conclude a mediation only to have their ensuing agreement subject to litigation down the road – to throw the field of mediation into a quagmire by calling into doubt confidentiality agreements without setting forth guidelines for future practice. The decision may also have a detrimental effect on the courts: mediation, an alternative forum, provides relief for the courts’ famously clogged dockets.
Lack of Uniformity in N.Y.
Compounding the uncertainty, in community mediation centers throughout the state, confidentiality agreements are mandated,3 including family law cases such as the underlying cause of action in Hauzinger. In other words, within the same county, for the same type of case, a publicly funded mediation session will be strictly confidential while an identical mediation session taking place in a private office may not.
In contrast to the lack of uniformity in New York , in 2004 New Jersey adopted the Uniform Mediation Act (UMA), which honors broad-based public policy values for protecting the confidentiality of mediation while also carving out noted waivers and exceptions. The confidentiality provision reads, “A mediation communication is privileged … and shall not be subject to discovery or admissible in evidence in a proceeding ….”4
Among the exceptions to the privilege are: threat of crime, violence and malpractice by the mediator. Additionally, an exception is carved out “for a mediation communication that is in an agreement evidenced by a record signed by all parties to the agreement.”5 In other words, this exception is for a document that would have been filed with the court, thereby inherently waiving confidentiality. These exceptions, while thoughtful and nuanced, leave attorneys, mediators and clients secure in the knowledge that what transpires during mediation stays in mediation.
The Hauzinger court, declining to apply the UMA standards, points out that the UMA has not been adopted in New York . The lack of legislation on point in New York seems all the more reason to apply well-established contract law principles.6
The only hint we have of some possible limitation to Hauzinger’s scope is that the court overtly states that “the parties were not represented by counsel when they participated in the mediation process that concluded with the execution of a separation agreement.” Hauzinger, at 646. An inference, perhaps to be drawn, is that consultation with outside counsel prior to signing the separation agreement may have swayed the court to quash the subpoena for the mediator’s testimony.
Additionally, it is worth noting that, while Hauzinger involved a matrimonial matter, the decision itself does not seem to be restricted to that area of law. It may well impact all mediators, in all fields. However, there is reason to believe this case may be limited to matrimonial mediation. First, there is a lower threshold for re-opening separation agreements than commercial settlement agreements. The former standard is informed by the fiduciary relationship between spouses and a “cloak of protection” ensuring fairness and equity in separation agreements.7 Additionally, in Lynbrook Glass and Architectural Metals Corp. v. Elite Assoc., 238 AD2d 319, 656 NYS2d 291 (2nd Dept. 1997), the Second Department upheld a confidentiality agreement contracted by parties to a commercial mediation. Nonetheless, Hauzinger may have a chilling effect on matrimonial (and other) mediation.
Using the same reasoning that provides for higher scrutiny of separation agreements, perhaps the facts in Hauzinger demanded that the court protect the interests of the wife from what may have appeared to be an overreaching or otherwise unfair agreement. Certainly the parties’ unwillingness to seek independent attorney review prior to signing the separation agreement may have influenced the court’s decision to compel the mediator’s testimony. However, the court fails to explain whether there were other sources of obtaining the information sought, whether there was inference of overreaching or duress or why it declines to uphold the parties’ confidentiality agreement.
No Guidelines for Practice?
Overall the court fails to provide its own reasoned standards which practitioners and parties can rely on. Certainly the public policy that seeks to scrutinize separation agreements along the lines of fairness and freedom from the taint of fraud or duress provides protection for divorcing families. Nevertheless, parties seeking to negotiate and draft these agreements outside the confines of the litigation process too need protection from having their confidentiality agreements set aside. The Legislature and the courts must work to create a well-delineated confidentiality privilege for all areas of mediation, such as those in the UMA and in New York ‘s Community Mediation Centers, with compelling, narrow and well-defined exceptions.
As things now stand, Hauzinger casts in doubt parties’ expectations of confidentiality, the linchpin of participation in the mediation process.
Abby Tolchinsky and Ellie Wertheim are partners at Family Mediation.
1. Brief of Appellant Mediator Carl R. Vahl, at page 6.
2. See Fed.Rules Evid.Rule 408, 28 U.S.C.A
3. McKinney ‘s Judiciary Law §849-b (6).
4. C.2A:23C-4(a) (2004).
5. C.2A:23C-6(a)(1) (2004).
6. Upholding a mediation confidentiality agreement in a complex, multiparty litigation, the Second Department held that a report prepared in connection with a mediation agreement was not subject to disclosure. Lynbrook Glass and Architectural Metals Corp. v. Elite Assoc., 238 AD2d 319, 656 NYS2d 291 (2nd Dept. 1997 ).
7. Christian v. Christian, 42 NY2d 63, 72-73 (1977), explaining the standard for court intervention in a matrimonial separation agreement.-
Ellie Wertheim, Esq.
Family Mediation LLP
270 West 17th Street
New York , NY 10011