By: Donald L Swanson
An insurer in the Boy Scouts of America bankruptcy [fn. 1] files a motion to compel production of documents held by a proposed mediator who did not become an actual mediator in the case.
The proposed mediator opposes production based upon a mediation privilege.
Guess how this dispute ends?
Here’s what happened:
- Boy Scouts of America files bankruptcy on February 18, 2020;
- Its first day filings include, (i) a motion to appoint mediators and to mandate mediation of various disputes (Doc. 17), and (ii) a Plan of reorganization (Doc. 20);
- On March 31, 2020, the Plan proponents contact Prof. Green to serve as co-mediator with a Mr. Finn;
- On April 7, 2020, Prof. Green and Mr. Finn, at the Plan proponents’ urging, begin organizing the mediation process, with frequent communications about the case between themselves and with some of the parties;
- In early May, 2020, Prof. Green, Mr. Finn and the parties who asked them to be mediators, begin preparing papers for the Court’s formal appointment of mediators;
- On June 2, 2020, an insurance company objects to Prof. Green’s employment as mediator, alleging his “deep ties to the parties, attorneys and claims at issue in this case” (Doc. 756); and
- On June 9, 2020, the Bankruptcy Court appoints Mr. Finn and two others as co-mediators but declines to appoint Prof. Green (Doc. 812).
Question & Context
So, the question is this:
- Does a mediation privilege protect the confidentiality of a party’s communications with Prof. Green in anticipation of his appointment as a mediator?
The context for the question is this:
- A year later (on July 1, 2021), the Plan proponents identify Prof. Green as their nominee for Settlement Trustee (Doc. 5466);
- Certain insurers object to Prof. Green’s appointment as Settlement Trustee, for the same reason they opposed his appointment as mediator; and
- The insurers want discovery of Prof. Green’s mediation-preparation communications of April, May and June, 2020, to support their opposition to his appointment as Settlement Trustee.
Prof. Green argues that his communications are protected by a mediation privilege. His arguments go something like this:
- Promoting full and frank discussions is essential for mediation, and confidentiality is essential to the mediation process—that’s because, absent a mediation privilege, parties are reluctant to lay their cards on the table;
- Absent confidentiality, mediation participants are cautious, tightlipped, non-committal—like poker players in a high-stakes game—instead of attempting to arrive at a just resolution of a dispute;
- Without confidentiality, the effectiveness of mediation is destroyed, threatening the well established public needs of encouraging settlement and reducing court dockets;
- A mediation privilege exists and is reflected in the Local Delaware Bankruptcy Rule on mediation;
- Many federal court opinions confirm that communications or documents made in “preparation” for a mediation (like those at issue here) are covered by a mediation privilege;
- Prof. Green is required by standards of professional conduct to assert a mediation privilege over all documents and information he generates or obtaines in anticipation of mediation;
- The parties with whom Prof. Green communicated do not agree to disclosure and have an expectation of confidentiality; and
- The long-standing practice of Prof. Green is to keep initial communications in anticipation of mediation confidential.
In opposing a mediation privilege to protect Prof. Green’s communications, insurers present arguments that go something like this:
- Prof. Green seeks to mask the extent of his dealings with lawyers associated with this case by contending that he served as a court-appointed mediator—their counsel even states this affirmatively: “from March 31, 2020 through June 9, 2020 Professor Green was acting in his capacity as a professional mediator in connection with this case”;
- But the Court never appointed Prof. Green as a mediator—therefore, the mediation privilege does not apply to him—otherwise, anyone could claim to be a mediator when required to produce documents that he or she wishes to withhold, and no case allows that;
- As a fallback, Prof. Green suggests that the documents he withheld are communications with the actual mediators in this case, but over 300 of the documents in question do not include communications between or among any of the court-appointed mediators;
- No court-appointed mediator is copied on many of these communications—which are precisely the documents that the insurers need to see to assess Prof. Green’s potential conflicts of interest;
- For the avoidance of doubt and to narrow the issues, the insurers do not seek any documents exchanged by Prof. Green with any of the Court appointed mediators;
- Any suggestion of an entitlement, to withhold documents generated by Prof. Green in preparing for the mediation, is untethered from any legal authority—there is no preparing-for-mediation privilege;
- Prof. Green is not a party to a written mediation agreement and is not appointed as a mediator by this Court, so any preparation he undertook is not protected by a mediation privilege;
- No authority supports a proposition that subjective beliefs of parties control when or how a mediation privilege applies; and
- No law supports the idea that a mediation privilege covers communications occurring prior to execution of formal mediation documents with an individual who is ultimately not appointed as a mediator.
Here’s how the Bankruptcy Court resolves the dispute:
- Prof. Green “shall promptly produce all documents and information responsive to the requests withheld on the basis of mediation privilege, with the exception of communications between Professor Green or his staff with any appointed mediator or any internal notes reflecting such communications”; and
- “The Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation of this Order.”
There are lots of lessons to be gleaned from the foregoing, not the least of which is this:
- Don’t count on a mediation privilege until the mediation is formally set and the mediator is formally in place.
Footnote 1. The case is In re Boy Scouts of America and Delaware BSA, LLC, Case No 20-10343 in the Delaware Bankruptcy Court.
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