In late December 2006, I wrote a blog on the California Supreme Court’s decision in Fair v. Bakhtiari, (Cal. 2006) 40 Cal. 4th 189, 51 Cal Rptr. 3d 871  (Case No. S129220, published December 14, 2006) in which the Court, once again, affirmed that mediation confidentiality is absolute. The Court held while documents prepared for purposes of mediation are generally inadmissible in civil proceedings, a settlement agreement prepared at the conclusion of a successful mediation will be exempt from this rule, if it “provides that it is enforceable or binding or words to that effect” pursuant to California Evidence Code §1123(b). The Court remanded the matter to the appellate court for further proceedings consistent with its rulings.

 As noted in my earlier blog, therein, the parties reached a settlement through mediation. The settlement agreement that the parties signed at the mediation provided that “any and all disputes subject to JAMS arbitration rules.” Thereafter, as the parties were finalizing the settlement, they began to dispute exactly what aspects had been settled. When one of the parties moved for arbitration pursuant to the above quoted provision, the other party objected to the admission of the settlement agreement urging, in part, mediation confidentiality and the unenforceability of the agreement.

 The trial court agreed and excluded the settlement agreement finding that it was not enforceable pursuant to California Evidence Code §1123(b).

 In its initial ruling on this case, the Court of Appeal reversed, determining that the language in the agreement, “any and all disputes subject to JAMS arbitration rules” could only mean the parties intended the settlement terms document to be “enforceable and binding.”
(Id. at 4-5). Thus, the appellate court reasoned, the memorandum complied with the requirements of Section 1123(b) and was admissible.

 The Supreme Court reversed and remanded the matter back to the Court of Appeal.
 On April 6, 2007, the Court of Appeal issued its unpublished decision essentially implementing the determinations of the Supreme Court. First, it held that the settlement terms document was not admissible under Evidence Code §1123(b) (“the agreement provides that it is enforceable or binding or words to that effect”) because this language requires “a direct statement to the effect that it is enforceable or binding.” (Id. at 6-7). The appellate court ruled that the provision in paragraph 9 of the settlement agreement “any and all disputes subject to JAMS arbitration rules” is not direct enough to satisfy the narrow interpretation required by the Supreme Court.

 On remand, plaintiff contended that paragraph 9 of the settlement agreement (just quoted) would satisfy California Evidence Code §1123(b) (“the agreement provides that it is admissible or subject to disclosure or words to that effect”). Taking its cue from the determinations of the Supreme Court, the appellate court rejected this contention, holding that this language must be narrowly interpreted and the writing “must directly express the parties’ agreement to be bound by the document they sign.” (Id. at 7). Finding no express agreement, the appellate court disagreed with plaintiff on this point.

 The plaintiff next contended that defendants were “judicially estopped from invoking mediation confidentiality due to their repeated representations to the trial court that the case had settled in mediation.” The appellate court rejected this contention. It noted at page 8:
“Judicial estoppel applies when “(1) the same parties has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud or mistake (citations)””     

       The appellate court then pointed out that at least the third and fourth elements are absent. Defendants never took an inconsistent position because they never claimed that the settlement terms document was admissible. (To the contrary, they continuously objected to its admissibility.) Further, the trial court never accepted or adopted as true the notion that this document was admissible. Thus, the appellate court found there was no basis to estop defendants from claiming that this document is not admissible. (Id. at 9).

 Finally, plaintiff asserted that defendants had waived their right to claim mediation confidentiality because of their repeated disclosure of mediation communications in the trial court. (Id. at 9). Again, the appellate court rejected this argument, noting that defendants had objected to the court’s consideration of the mediation-related communications, and that defendants disclosed such confidential information only after and in response to plaintiff’s initial submission of the settlement terms document to the court. That is, defendants made their disclosures solely in an attempt to demonstrate that the settlement terms documents was not admissible.

 Further, because of the strong public policy in California protecting mediation confidentiality, the appellate court would not imply a waiver under the facts of this case.
 As a consequence, the court of appeal affirmed the trial court determination to exclude the settlement agreement, finding it unenforceable under California Evidence Code §1123(b).
 So. . . to quote Paul Harvey “And now you know. . . The Rest of the Story.” 

 Earlier this week, I mediated a case between a homeowner and a general contractor about an unsuccessful home improvement. The general contractor built two patios, pouring the concrete without checking the weather forecast. Later that evening, it rained heavily causing the concrete not to “cure” properly. While the contractor attempted to correct the problem by spreading another product along the top of the concrete, this “fix” did not work. As a consequence, the homeowner sued all possible parties, and the parties appeared for mediation.

 The problem was that the parties were not prepared for mediation. While everyone agreed that there was a “problem” with the larger of the two patios, no one had employed an objective third party to provide a complete diagnosis of the “problem” and all of the possible remedies. Rather, the homeowner, in an attempt to keep costs down, had obtained only informal evaluations from some friends – none of them complete. The defendant responsible for the product that was spread on the concrete as a “fix,” had hired an expert but that expert was concerned only with his client’s product, not the overall project and certainly, not how to remedy the overall “problem.” The homeowner was so upset with the way the job turned out, that the homeowner would not allow the contractor onto the property to inspect the patios and assess the “problem.” The contractor did not send an expert in its stead to assess the situation. As a result, the contractor did not know the contours of the “problem” much less how to remedy them.

 So. . . here were the parties at mediation attempting to resolve a dispute that was not clearly defined. None of the parties had all of the facts: they neither knew exactly what was causing the defects on the larger patio nor the possible remedies for the defects. Yet, the homeowner was making monetary demands based on the informal and incomplete evaluations given by friends. It reminded me of the game “pin the tail on the donkey” in which the players - blindfolded – attempt to pin a tail on the picture of donkey pasted on a wall. Here, the parties were attempting to “pin” damages on an ever moving and not fully known factual pattern – because no one had taken the time to ascertain the facts. “Resolution” was an ever moving, ever evasive target.

 Needless to say. . . the case did not settle. How could it? No one knew the exact parameters of the dispute, and thus of the potential liability. One cannot determine damages without knowing first what happened and thus where and to what extent the liability attaches.

 Consequently, a valuable opportunity – to settle at mediation – was wasted. This is a matter that should have settled at mediation: with a full diagnosis and prognosis, it would have been relatively straightforward to work out a resolution.
      The moral of this tale is that before attending a mediation – be prepared. Conduct the necessary factual investigation and determine the outer boundaries of the dispute and of the various remedies. Know the facts – know where the liabilities lie and what the possible damages may be. Mediators often work magic but they cannot create a resolution out of nothingness: the parties have to come to mediation with more than just an ephemeral desire to settle.
 . . . Just something to think about.   
  

 Benjamin Franklin once said “Remember that time is money.” (Advice To A Young Tradesman.) In a May 29, 2002 article on the Sci-Tech web page of CNN.com, a formula created by Economic Professor Ian Walker of Warwick University in England demonstrated that “time is actually money.” More specifically, he concluded that in 2002 the average minute was worth approximately 15 cents to men and 12 cents to women. The formula is: V= (W (100-t/100))C, where V is the value of an hour, W is a person’s hourly wage, t is the tax rate and C is the local cost of living. To calculate the value of your time, click here

 In a more recent article (published on August 30, 2004) on the web entitled Time Isn’t Money, Erica Okada, a University of Washington assistant professor of marketing, and Stephen Hoch, professor of marketing at the University of Pennsylvania Wharton School, discuss their study (involving 360 undergraduate students) that revealed “that the concept of time is easier to write off than is money.” (Id.) While people “are relatively certain about how much their money is worth,. . . when it comes to their time, people are less certain about its value.” (Id.) That is,

“. . . consumers are used to transacting primarily with money and are accustomed to assessing its value. . . . The average consumer in today’s world hasn’t learned how to assess the price or value of time.” (Id.).

 So what does this have to do with mediation? A great deal. Throughout the United States and especially in Los Angeles County, many mediators – including this blogger – provide their services on a pro bono or free basis to certain types of court cases. Many times, precisely because the parties are not paying in cold hard cash for the services of the mediator, they do not take it seriously. They come unprepared, or without all of the parties needed to reach a settlement or without the necessary settlement authority or they come quite involuntarily in that they are appearing simply because they were “ordered” to do so by the court and have no intentions of resolving their dispute.

 Because the mediation is “free”, the parties have not placed any value on it. Like the average consumer, the parties in a “free” mediation have not learned how to assess the price of time. They have not applied Professor Walker’s formula to calculate how much not only their time is worth but that of the mediator’s as well. They do not realize that both they and the mediator are giving up something of value. As a result, they are nonchalant or dismissive about the whole matter and do not take it seriously. Like the students in the study, their level of satisfaction does not markedly depend on the outcome since they are not paying in cash but only in time. They do not realize that time really is worth something; that there is no such thing as a “free” lunch much less a “free” mediation. 

 Everything does have a cost: even pro bono mediations. Just apply Professor Walker’s formula to figure it out in real dollars and cents.
 . . . Just something to think about.     
      

 Most mediators will agree that a dispute will not be resolved until the interests and needs of all parties have been met. In the April 2007 issue of Yoga Journal, Meagan Francis discusses this concept as one of Non-Violent Communication (“NVC”) in her article entitled “Blossom At Work”. Therein, she discusses this approach to work and life created by Marshall Rosenberg, a clinical psychologist “who left private practice in the early 1960’s to promote peace and compassion on a wide scale” and “created the NVC technique while helping to integrate schools during the civil rights movement.” (Id. at 72). He founded the Center For Non-Violent Communication in 1984 in Southern California and teaches his model throughout the world.

 The NVC model is very understandable:

  The NVC breaks communications down into four parts:

     observing(stopping to recognize what is actually happening in the moment,
  rather than voicing your opinion about it);

    feeling (identifying the feelings arising in you and your sense of the feelings arising in
  others);

  needing (getting clear about what needs you and other might have in the situation); and

  requesting  (asking to have those
  needs met). (Id. at 72).

       Simply stated, when you find yourself getting embroiled in a dispute, take the time to observe what is going on. Listen, really listen, to what the other parties are saying. “Observe the situation without judgment.” (Id. at 73). Do not assume or label anything. Next, get in touch with your own thoughts – why are you reacting the way you are reacting? Is it out of fear, anxiety, and if so, why? What is the real cause of the fear, anxiety, et. cetera? Then, and this is most important to reaching any resolution, identify your own needs. What needs do you have that must be met to accomplish a resolution? These needs “have nothing to do with judging another person. Your need isn’t for [the other person] to do or not do something.” (Id.). Rather, your needs comes from within you and are more basic – e.g. respect, acknowledgment, security or stability. Finally, “make a request that can help you get your needs met.” (Id.) By verbalizing in specific and definite terms what it will take to resolve the dispute, the other party will understand exactly what is required of her to end the dispute. 

       So. . . whether the concept is one of meeting everyone’s needs and interests or that of non-violent communication, the outcome is the same: a dispute will not be resolved until each party obtains what she needs from the others. While there may be different ways to get there, the ending is always the same: resolution.
       . . . Just something to ponder.   

 In the May 2007 issue of Negotiation (Vol. 10, No. 5), Michael Wheeler discusses What About The Fine Print? His thesis is that all too often, the resolution of a dispute hinges not on the amount of money that changes hands, but on the language used in the agreement. As Mr. Wheeler notes, “. . . choosing the wording is a negotiation in itself, one with its own unique pitfalls.” (Id.) He offers five guidelines: (1) define the deal before you set the price; (2) know the words’ worth; (3) balance precision and flexibility; (4) avoid doom and gloom; and (5) negotiate the relationship.

 With respect to the first - define the deal before you set the price – Mr. Wheeler urges each party in a negotiation to understand what is the precise deal with all of its implied value. Understand exactly what is being “bought”, “sold”, or being “offered for purchase” or being “offered for sale”. Once this is understood, you will not short-change yourself in the negotiations.

In terms of knowing your words’ worth, the author reminds the reader to “remember that words are means to your goals, not ends. . . . Instead of battling over language that’s difficult or costly to enforce, look for other ways to achieve the same goal.” (Id.) For example, in California, non-competition clauses are contrary to public policy and thus, almost impossible to enforce. Rather than insisting on such a clause that in the end will probably be unenforceable, Mr. Wheeler suggests, put in other types of clauses such as offering an incentive bonus only after so many years of service or a clause requiring payment from the employer to the employee upon early voluntary departure by the employee. In sum, “ensure that compromises on one front are compensated by gains on another.”

 The third guideline is to balance precision and flexibility. That is, sometimes less is more. Simpler, broader language may be better than detailed provisions that result in the parties getting mired in archaic legalese with no way out. Oftentimes, the simpler, the better or, in the words of an old adage, “keep it simple.”

 In close connection with the above is the next guideline – avoid doom and gloom. Do not attempt to cover every contingency or every scenario in an agreement. Rather, “keep sight of the big picture.” (Id.) Do not quibble over moot details. As an example, Mr. Wheeler recites a negotiation where a bank wanted a $50 million guarantee. The developers would only agree to sign a guarantee for $20 million. Then on partner asked the other “Are we worth $20 million?” “Nowhere near it, came the reply.” “Fine said the other partner.” “If we are going bankrupt anyway, we might as well agree to $50 million.” Do not get stuck on the details once the broad points have been resolved.

 Last but probably the most important is to negotiate the relationship. “Carefully choosen contract language fosters better deals and stronger relationships.” (Id.) Just as the substance of the contract is important, so is the process used to negotiate it. “When a long-term relationship is in the offing, the negotiation itself is a trial marriage.” (Id.) As Mr. Wheeler points out:    

Ideally, the process of negotiating terms and conditions should be one of mutual learning in which parties anticipate problems before resources are wasted or tempers flare. . . . Candor, patience, and open-mindedness in the course of negotiation help foster such healthy working relationships. (Id.).

 In sum, negotiation and reaching an agreement is about a lot more than just the money. In fact, the money plays only a very small part of it.
 . . . Just something to think about.