“You don’t need my permission. Just click your heels together three times and say, ‘There is no place like mediation.’”
–U.S. Bankruptcy Judge Benjamin Goldgar, In re Caesars Entertainment hearing on 2/18/2016.
Despite such a statement, the Bankruptcy Court in Chicago had already, prior to February 2016, revoked its local rules on mediation.
Fast-forward to mid-September of 2016. This same Bankruptcy Court in the same In re Caesars case bemoans a mediator’s failure to provide evidence on usually-confidential mediation details.
–In response, the mediator resigns.
What these events reveal is the desperate need for a Federal Bankruptcy Rule on mediation with confidentiality requirements.
The reality, in Chicago’s Bankruptcy Court, is that no mediation rule exists: no local rule, no Federal rule, no statute . . . nothing. So, when a mediation session does occur in such Court, there is no basis for imposing confidentiality requirements on the process.
–The parties might agree to confidentiality. But such an agreement does not bind others or the Court.
—Rule 408 of the Federal Rules of Evidence provides confidentiality protection for settlement discussions. But this protection is limited, and it is subject to significant exceptions: e.g., “The court may admit this evidence for another purpose” [Rule 408(b)].
–A state mediation statute might, arguably, be applicable. But the In re Caesars Judge gives no credence, whatsoever [not even a nod], to the Illinois Alternative Dispute Resolution Act, which provides for mediation confidentiality.
So . . . when the Judge in In re Caesars declares his expectation that the mediator should have provided substantive evidence on usually-confidential mediation details, the Judge is acting within existing rules.
–Such judicial expectation may be anathema to those who view mediation confidentiality as nearly-sacred. But the Judge is, technically, acting appropriately.
–This needs to change!
Similarly, if there are 40 additional bankruptcy courts in the United States without local mediation rules, these 40 additional bankruptcy courts are in the same boat as the Bankruptcy Court in Chicago: they have no mediation rules.
–This also needs to change!
The way to accomplish the needed change is to adopt a Federal Bankruptcy Rule on mediation that imposes mediation confidentiality requirements upon all bankruptcy courts.
–Such a Rule needs to be adopted as quickly as possible.
–With such a Rule in place, the In re Caesars mediator-resignation flap could not have occurred–either in Chicago or in any other bankruptcy court in these United States.
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