It’s a beautiful scene: Federal courts applying and enforcing their local rules on mediation confidentiality.
–Nearly all U.S. District Courts and U.S. Circuit Courts of Appeals, and many Bankruptcy Courts, have such local rules.
But then the Ninth Circuit Court of Appeals comes along with a bombshell. It suggests that local rules on mediation confidentiality cannot be enforced in the Federal courts:
“A local rule, like any court order, can impose a duty of confidentiality as to any aspect of litigation, including mediation. . . . But privileges are created by federal common law. See Fed.R.Evid. 501. It’s doubtful that a district court can augment the list of privileges by local rule.”
—The Facebook, Inc. v. Pacific Northwest Software, Inc., 640 F.3d 1034, 1040-41 (9th Cir. 2011).
There is no Federal mediation privilege?! . . . even when a Federal court has a local rule requiring mediation confidentiality?!
–Apparently not, according to the Ninth Circuit.
[Note: An evidentiary privilege means that a person cannot be compelled, as a witness, to disclose certain (“privileged”) information — as more fully discussed here.]
Facebook Facts and Ruling
The Facebook case involves a mediated settlement agreement – a hand-written document — that subsequently falls apart in negotiations over the final deal document. One party tries to enforce the hand-written agreement and offers evidence “of what was said and not said during the mediation.”
–The other party objects because the District Court’s local mediation rules require confidentiality of mediation communications. The District Court sustains the objection.
The Ninth Circuit, on appeal, affirms the evidence exclusion. But it does so on the basis of a confidentiality agreement between the parties — not on the basis of the District Court’s local rule requiring mediation confidentiality.
–As quoted above, the Ninth Circuit explicitly rejects the idea that the District Court’s local rule on mediation confidentiality can exclude mediation-related evidence. And it basis this rejection on the Federal Evidence Rule on privileges: Rule 501.
–Granted, the quote above is mere dicta, since the Court bases its ruling on another legal standard, but the quote is still authoritative for trial courts in the Ninth Circuit. The broader question is whether the dicta is persuasive for other courts.
Two Legal Standards
1. Federal Evidence Rule 501
Fed.R.Evid. 501 is the Federal rule on evidentiary privilege. It is titled, “Privilege in General,” and reads:
“The common law — as interpreted by United States courts in the light of reason and experience — governs a claim of privilege unless any of the following provides otherwise:
–the United States Constitution;
–a federal statute; or
–rules prescribed by the Supreme Court.
But in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”
2. 28 U.S.C. § 652(d)
The Alternative Dispute Resolution Act of 1998, in 28 U.S.C. § 652(d), reads:
“(d) Confidentiality Provisions.— . . . each district court shall, by local rule adopted under section 2071(a), provide for the confidentiality of the alternative dispute resolution processes and to prohibit disclosure of confidential dispute resolution communications.”
–What’s the effect of a district court’s local rule requiring mediation confidentiality, adopted under the Congressional mandate of 28 U.S.C. § 652(d)?
–How does Rule 501, as explained in the Facebook case, square with the confidentiality directive in 28 U.S.C. § 652(d)?
Putting it Together
Here’s what appears to be happening:
–Federal trial and appellate courts prohibit discovery of information and exclude evidence under their own mediation confidentiality rules. And they do so seriously, vigorously, and with regularity. They also evaluate (and sometimes grant) exceptions to confidentiality, based on a balancing of competing interests.
–The Ninth Circuit, in Facebook, is saying that local confidentiality rules do not rise to the level of an evidentiary “privilege” under Rule 501.
It’s difficult to see how these two positions can be reconciled.
–Perhaps it’s merely a question of degree between “confidentiality” and “privilege”?
–Perhaps the enforcement of local confidentiality rules by Federal courts is rising to the level of Federal common law under Rule 501?
–Perhaps 28 U.S.C. § 652(d) qualifies as “a federal statute” that “provides otherwise,” as required by Rule 501?
Regardless, here’s guessing that all Federal courts, of every stripe, will continue applying and enforcing their own local rules on mediation confidentiality—except for trial courts in the Ninth Circuit.
[Note: For a skeptical view of the Ninth Circuit’s position, see footnote # 15 in this case.]
A Federal bankruptcy rule on mediation confidentiality needs to be adopted by the U.S. Supreme Court – as authorized in 28 U.S.C. § 2075. Such a rule would satisfy the “rules prescribed by the Supreme Court” provision in Fed.R.Evid. 501.
And . . . it looks like a mediation confidentiality provision also needs to be added to the Federal Rules of Civil Procedure, under 28 U.S.C. § 2072, to overcome the Ninth Circuit’s no-mediation-privilege opinion in The Facebook, Inc. v. Pacific Northwest Software, Inc.
Thanks for sharing this case, and your thoughts on it. Your analysis, IMHO, is correct. Privilege and confidentiality are not the same thing, and the mediation privilege as such does not yet exist. I support adoption of a federal rule expanding the list of privileges to include a mediation privilege. Looks like someone needs to pick up the laboring oar and make a presentation to the federal rules committee.
Thanks, Leif, for you thoughts and kind words.