By: Donald L Swanson
You don’t see this very often: a dispute over the confidentiality of mediation communications.
But such a dispute recently happened in In re Barretts Minerals, Inc., Case No. 23-90794, Southern Texas Bankruptcy Court. And the result is this: mediation confidentiality remains alive and well.
In re Barretts Minerals is a mass-tort asbestos case. And Debtor is pursuing confirmation of a bankruptcy plan under § 524(6). Mediation efforts are in progress.
Pfizer Inc. is an interested party and moves (in Doc. 542) to amend a prior Mediation Order, so that Pfizer can pursue discovery on what happens in the mediation process.
Request for Relief from Confidentiality
Here’s how Pfizer’s motion explains its request.
The prior Mediation Order should not restrict Pfizer’s rights to future discovery in connection with the bankruptcy case.
Specifically, Pfizer wants:
- to prevent the Mediation Parties from invoking a mediation privilege to withhold information on plan confirmation issues, such as on good-faith negotiation; and
- to preserve Pfizer’s rights to “the discoverability or admissibility of communications, information, or documents related to or exchanged during the Mediation.”
Pfizer wants to ensure that Pfizer is not precluded by the prior Mediation Order from seeking discovery into mediation-related communications that may affect Pfizer’s rights or from using such discovered information as evidence.
Oral Arguments
A hearing occurs on Pfizer’s Motion on March 4, 2024. What follows is an attempt at summarizing oral arguments at that hearing.[Fn. 1]
During oral arguments the Bankruptcy Judge expresses, in multiple ways, an incredulity at Pfizer’s request. The Judge explains, in multiple ways, that mediation communications and documents are neither discoverable nor admissible.
Pfizer’s counsel explains their concern that the proponents and supporters of Debtor’s plan will attempt to use communications and documents exchanged in the mediation as evidence of the plan being proposed in good faith. And if those parties attempt to do so, Pfizer needs discovery about and evidence from the mediation effort to refute that evidence.
The Bankruptcy Judge responds, on multiple occasions during the hearing, that Pfizer’s request is misplaced. The Judge insists that:
- what happens during mediation must be kept confidential—that such confidentiality is an essential component of any mediation process;
- every mediation order and all mediation rules provide for confidentiality of mediation communications to the broadest possible extent; and
- while the facts that mediation occurred and that a settlement was reached may be used as evidence of good faith, what happened during the mediation may not.
Pfizer’s counsel expresses skepticism, based on a history (as Pfizer sees it) of plan proponents and supporters using details of mediation negotiations as evidence of good faith in support of a proposed plan. And Pfizer insists that it must have the right to discover and use mediation communications to refute such evidence.
The Bankruptcy Judge turns to the plan proponents and asks whether they intend to use information on what happened during mediation as evidence of good faith. After hearing their response, the Bankruptcy Judge declares that neither side can:
- seek discovery of what happened during mediation; or
- use what happened during mediation as evidence of anything.
Accordingly, the Bankruptcy Judge rejects Pfizer’s request.
Conclusion
Mediation confidentiality remains alive and well!
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Footnote 1. An audio recording of the hearing appears on the Court’s electronic docket for In re Barretts Minerals, Inc., at Doc. 680. The audio recording involves two separate motions, including the mediation motion discussed above. Oral arguments on the mediation motion begin near the 14:30 mark of the audio recording.
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