Bankruptcy’s “Mediation Desert” Needs to Bloom: The Eighth Circuit Example

By: Don Swanson

I’m always hesitant to say something doesn’t exist . . . because I might have missed it.

–Nevertheless,  I’m going to give it a shot, knowing I can, later, edit-out any error brought to my attention.

My focus, here, is on whether bankruptcy courts within the Eighth Circuit Court of Appeals system (the Circuit where I reside) have local rules on mediation.

Bankruptcy Courts WITHOUT Local Mediation Rules

The following seven bankruptcy court districts within the Eighth Circuit system HAVE NOT adopted a local rule on mediation and, collectively, create a large swath of “mediation desert” (as defined here) across the central part of the United States:

Arkansas, Eastern District

Arkansas, Western District

North Dakota

South Dakota

Iowa, Northern District

Iowa, Southern District

Missouri, Western District.

Bankruptcy Courts Who HAVE Adopted Local Mediation Rules

The following three bankruptcy court districts within the Eighth Circuit system HAVE adopted local rules on mediation:

Minnesota (Rule 9019-2 Mediation)

Nebraska (Local Rules 7016-1 & 9014(C))

Missouri, Eastern District (L.R. 9019 – Mediation)

Mediation Authority and a Confidentiality Standard are Needed

The foregoing “mediation desert” information demonstrates the need for a Federal rule on mediation that covers all bankruptcy courts in the entire system.  Here’s what such a Federal rule needs to address:

1. We need a clear and unambiguous authorization for the mediation of bankruptcy disputes in every bankruptcy court.

—Seven of ten bankruptcy court districts in the Eighth Circuit system don’t currently have any such authorization!

2. We need a clear and unambiguous confidentiality requirement for mediation in every bankruptcy court.

—Eight of ten bankruptcy court districts in the Eighth Circuit system are operating without any mediation confidentiality rule!

–The Minnesota Example

Minnesota’s Bankruptcy Court has a one-sentence local rule on mediation.  Its Local Rule 9019-2 is titled, “Mediation,” and provides, in its entirety, as follows:

“The court may refer any adversary proceeding or contested matter for mediation by any other federal judge or any mediator chosen by the parties.”

This Local Rule 9019-2, obviously, authorizes mediation to occur within the Minnesota Bankruptcy Court.  But where is the provision for confidentiality?

–Confidentiality requirements aren’t contained in its local mediation rule.

–Perhaps the Minnesota Bankruptcy Court looks to State law for such confidentiality requirements?

–Or maybe the Minnesota Bankruptcy Court relies on mediation confidentiality rules adopted by the U.S. District Court in Minnesota?

The reality (as recently demonstrated in Chicago) is that mediation confidentiality requirements probably don’t exist in any bankruptcy court, unless the court has its own confidentiality rule.

Conclusion

A large “mediation desert” exists within the Eighth Circuit system, consisting of bankruptcy courts that don’t have local mediation rules.

This desert reveals an immediate and pressing need for a Federal bankruptcy rule on mediation that:

1. authorizes mediation in every bankruptcy court; and
2. establishes mediation confidentiality requirements for the entire bankruptcy system.

The “mediation desert” needs to bloom!