Mediation Privilege in Full Bloom Under State Law

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A flower in full bloom (photo by Marilyn Swanson)

By: Donald L. Swanson

The mediation privilege “provides for a broad screen of protection that renders confidential all communications . . . made as part of the mediation process.”

Grubaugh v. Blomo ex rel. County of Maricopa, 238 Ariz. 264, 359 P.3d 1008 (App. 2015).

This Grubaugh v. Blomo case exemplifies a mediation privilege, created by state statute, in full bloom: i.e., given its greatest possible effect.

Background of the case

Karen Grubaugh brings a legal malpractice action against her former attorneys. The alleged malpractice occurs during the mediation of divorce issues and relates to a mediated agreement on the distribution of business assets and related tax liabilities.

Before discovery begins, the malpractice defendants ask the court to rule that either, (i) the statutory mediation privilege is waived by the filing of the malpractice complaint, or (ii) all mediation-related allegations in the malpractice complaint must be stricken.

Arizona’s mediation privilege statute provides that all mediation communications and materials are confidential and not discoverable or admissible, unless one of these four exceptions exists:

1. All parties agree to the disclosure.

2. The disclosure is relevant to a claim or defense by a party against the mediator or the mediation program.

3. The disclosure is required by statute.

4. The disclosure is necessary to enforce an agreement to mediate.

The Arizona Court of Appeals provides the following analysis of its construction of this statute:

Arizona’s statutory language establishing the mediation privilege “is plain, clear, and unequivocal,” and the plain meaning of a statute controls, unless the plain meaning “leads to absurd or impossible results”;

A “plain-language application of the statute in this case does not produce an absurd result” — instead, it establishes “a robust policy of confidentiality” consistent with Arizona’s “strong public policy” of encouraging settlement rather than litigation;

The mediation privilege is not waived by the malpractice complaint filing “because none of the four specific statutory exceptions” applies;

The mediation privilege “provides a broad screen of protection” that makes all mediation-related communications confidential, “including those between an attorney and her client, made as part of the mediation process”; and

The legislature “could have exempted attorney-client communications” from the mediation privilege, “but it did not do so.”

Implied Waiver Issues

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In full bloom (photo by Marilyn Swanson)

The trial court in Grubaugh v. Blomo ruled that the mediation privilege is waived by filing the malpractice lawsuit. It likened the situation “to one in which a party impliedly waives the attorney-client privilege.”

But the Court of Appeals rejects this analogy on the following grounds:

The attorney-client privilege, which can be waived by a course of conduct, “originated at common law” and then became codified by the Arizona Legislature, and Arizona’s “codified attorney-client privilege includes a broad waiver provision”;

In contrast, Arizona’s mediation privilege “has no common law origin” — it is “created entirely by the legislature”;

“Unlike waiver of the attorney-client privilege under the statute and common law, statutory exceptions to the mediation privilege “are specific and exclusive,” and the mediation privilege statute “leaves no room for an implied waiver”;

The trial court’s finding of implied waiver is based, in part, on the idea that the mediation privilege statute “did not contemplate” the malpractice issues presented in this case, but this idea is unsupportable “in light of the language of the statute”; and

The mediation privilege statute “encourages candor” throughout mediation processes, (i) “by alleviating” fears that a party’s communication to a mediator “may be used against them in the future,” and (ii) by encouraging “candor between attorney and client in the mediation process.”

Third Party Interests

The Court of Appeals adds the following observations into the mix:

The mediation privilege is also held by the other party to the mediation: i.e., the malpractice plaintiff’s former husband;

“The former husband is not a party to this malpractice action and the parties before us do not claim he has waived the mediation process privilege,” so his privilege interests must be upheld as well; and

“The mediator may also be a holder of the privilege, but we need not reach that issue in this opinion.”

Plaintiff’s Malpractice Complaint

If the mediation privilege is not waived, the malpractice defendants want the mediation privilege applied both ways: they ask, in such circumstances, that all mediation-related communications be “stricken from the complaint.”

The Court of Appeals agrees that the mediation privilege applies both ways:

–The mediation privilege requires that allegations in the complaint, which are “dependent upon privileged information” be stricken from the complaint. “To hold otherwise would allow a plaintiff to proceed with a claim, largely upon the strength of confidential communications, while denying the defendant the ability to fully discover and present evidence crucial to the defense of that claim.”

–“Striking from the complaint any claim founded upon confidential communications during the mediation process is the logical and necessary consequence of applying the plain language of this statutory privilege.”

Conclusion

This Grubaugh v. Blomo case reveals a state statute on mediation privilege in full bloom: the privilege is given its greatest possible application under statutory language in this case.

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