Is a settlement agreement signed by less than all parties at the conclusion of a mediation enforceable? Every once in awhile, this question arises because one of the parties has attended by telephone and is not near a fax machine et cetera to sign the agreement and send it back. Up until now, I have been under the impression that all parties must sign for it to be enforceable.

            One of the appellate courts in California has now ruled that this is not necessarily so. In Provost v. Regents of the University of California, Case No. G043523 (filed 12/14/11),  (Provost v Regents ) Division Three of the Fourth Appellate District (sitting in Orange County) ruled, among other things, that the statute allowing for enforcement of settlement agreements (C.C.P.§664.6) “. . .does not require that the agreement be executed by every party to the action who benefits from it. . . .” (Id. at p. 10). Thus, while these non-signing parties may not enforce the agreement since they did not sign it, the agreement may still be enforced by those who did sign it. (Id. at p. 10).

            Plaintiff Glenn Provost was an anesthesiologist at the University of California Irvine Medical Center who sued both the Regents and two individual doctors for wrongful termination after he reported alleged illegal conduct by defendants.

            The parties attended mediation which, after several sessions, resulted in a stipulation to settle. Shortly thereafter, his counsel filed a notice of settlement of the entire case.

            But then, plaintiff began having second thoughts and refused to execute the final settlement documents. So, the Regents filed a motion to enforce the settlement pursuant to C.C.P.§664.6. Initially, the trial court denied the motion, agreeing with plaintiff that Regents had not actually signed the agreement since it was an in-house lawyer, rather than an “authorized corporate representative” that signed the agreement. But, in response to a writ application, the appellate court issued an order to the trial court to vacate its order of denial and reconsider. Upon reconsideration, the trial court granted the motion and entered a judgment enforcing the settlement.

            Plaintiff appealed on several grounds, all of which were rejected by the appellate court. First, he argued that Regents did not actually sign the agreement because it was signed by in-house counsel Carolyn Yee. The appellate court disagreed concluding that at all times Ms. Yee was acting as the party representative and not as an attorney, and was, in fact, represented by outside counsel. She had, in essence, been appointed as the “authorized party representative” of the corporation (i.e. Regents) and so was the duly authorized agent of Regents to execute the settlement agreement. The fact that she was in-house counsel was not relevant; nor was it relevant whether she was an officer. As long as she was a duly designated and qualified employee, she could sign the agreement. As the court noted:

 One can hardly expect an officer of Ford Motor Company or Wal-Mart Stores to participate in every settlement of every case, down to the smallest personal injury action, to be eligible to take advantage of the mechanism provided by Section 664.6 (Id. at p. 8).

            The appellate court next rejected Plaintiff’s argument that the agreement was not enforceable because the individual defendants did not sign it. Noting that the individual defendants were not seeking to enforce the agreement, the appellate court found these parties simply to be third party beneficiaries, holding that the settlement may be enforced by those signing it. (Id. at p. 10).    

            Plaintiff next argued that the settlement agreement was not enforceable because it was conditional upon the approval by Regents, and he revoked his acceptance before the Board of Regents actually approved it. The court found otherwise; that the Board approved it before plaintiff changed his mind. Thus, the court rejected this argument. (Id. at p. 11-12).

            Plaintiff also claimed duress and that he was coerced into signing the settlement because the mediator told him that Regents would have criminal charges filed against him if he did not sign then and there. Further, he alleged his own attorneys told him that he had little chance of winning at trial and if he did, he would recover only a minimal amount.

            The trial court refused to consider these assertions due to the mediation privilege found in Evidence Code §1119(a). That is, mediation confidentiality precluded any consideration of these allegations. The appellate court agreed, citing Cassel v. Superior Court (2011) 51 Cal. 4th 113, 136, (Cassel Opinion ) noting that “[t]here is no exception for “good cause”. (Id. at p. 16).

            This part of the opinion bothers me because the California Rules of Professional Conduct provides that it is unethical for an attorney to threaten present criminal charges to obtain an advantage in a civil dispute. (Rule 5-100). (Most states have a similar rule). (I also question the ethics of the mediator in relaying this alleged threat.) Thus, due to mediation confidentiality, the alleged unethical conduct of the Regent’s counsel (and the mediator whether as a mediator or as an attorney) will never be revealed or acted upon. The alleged violation if true, will go uninvestigated and unpunished. Perhaps, this is why some states have created an exception to mediation confidentiality for claims of professional misconduct or malpractice. (See Section 6 of Uniform Mediation Act adopted by 10 states and District of Columbia).

            But back to the opinion. Plaintiff also claimed that Regents fraudulently concealed evidence. Finding that plaintiff failed to provide evidence to support such claims, the appellate court rejected this contention.  (Id. at p. 17-18).

            Contrary to plaintiff’s final two arguments, the appellate court found that the settlement agreement was entire and complete; that is, not missing anything and that it was admissible. Reviewing the agreement itself, the appellate court found it contained the language required by Evidence Code §1123 to render it admissible.

            The decision is interesting due to its several holdings: (1) in-house counsel can execute settlement agreements as long as she is the duly authorized corporate representative; (2) not all parties must sign the agreement in order for those signing it to enforce it; and (3) arguments of coercion and duress (amounting to possible unethical conduct) are shielded by mediation confidentiality. This decision provides much to mull over!

            . . .Just something to think about! 

            I want to thank each of you for your support throughout the year and wish you a very Happy Holiday and a wonderful 2012- may it bring you and your family health, happiness prosperity and most of all, a peaceful resolution   to all of your disputes!

           My blog will return on January 6, 2012.

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           In one of my very early blogs, I discussed the book, Beyond Reason by Daniel Shapiro and Roger Fisher. In it, they discuss five ways or core concerns to overcome emotions when negotiating. One of them is “appreciation: express appreciation of and to your adversary”. (The others are affiliation, autonomy, status and role.) Each one of us loves to feel appreciated and showing it to others, does wonders in getting issues resolved.

            I mention this because recently my colleague Maria Simpson, Ph. D in her Two Minute Training: Communications Tips for November 15, 2011 showed how appreciation of others works as a great motivator to get people to do things. She explains it so delightfully in terms of The Wizard of Oz (by L. Frank Baum), that I can only do it justice by quoting verbatim:

If I Only Had a Brain

 “The dilemma over motivation and rewards never ends. Most of us agree that using carrots instead of sticks works better at encouraging people to do their best, but we don’t all agree on what those carrots should be. Sometimes we are limited by the organization’s policies or resources, and sometimes by our own lack of understanding of what people need to be motivated and feel rewarded.”

“Ultimately, giving each person more of what matters to that person is the best motivator. Yes, money works, but after a while, even money doesn’t trump disrespect or lack of opportunity or lack of value in the work. People need more than money.”

“This isn’t a new idea. L. Frank Baum gave us the perfect example long ago in The Wizard of Oz. Each character talks – or rather sings – about a very basic need, and Baum was a genius for demonstrating how to reward and fulfill those needs.”

“Throughout the film Scarecrow sings about how much better his life would be “if I only had a brain.” He’d think great thoughts, he could solve puzzles. “I would not be just a nothin’ my head all full of stuffin’/ My heart all full of pain./ I would dance and be merry, life would be ding-a-derry/ if I only had a brain.” Scarecrow wants to be happy and he believes that if he were smarter, he would be happier because of the great ideas he would have and could talk about with others.”

“Tin Man desperately wants to be more human, to feel human emotion, and he thinks that would be possible if he had a heart. He thinks of himself as “an empty kettle” and says  “. . . I’m torn apart./ . .  I’m presumin’ that I could be kind-a-human/if I only had a heart. . .” He wants “Just to register emotion . . . and really feel the part.” We all long to connect with others and feel those emotions.”

“The Cowardly Lion wants to be brave like all the other lions, “ . . . I could show my prowess, be a lion not a mou-esse/If I only had the nerve.” Or “noive,” as he pronounces it.”

“And Dorothy just wants to go home, to be back with her family and the people who love her.”

“There are two lessons here about very basic needs and how to fulfill them. First, all of the characters already have the qualities they wanted; they simply didn’t recognize them in themselves, so helping them gain that recognition is the best reward they can receive and can change lives. Scarecrow thinks of clever ways out of difficulties. Tin Man feels emotions as he cries when they all first meet, almost getting rusty again. The Cowardly Lion was brave when it mattered; he overcame his fear and saved the people he cared about.”

Second, the characters didn’t think they had the qualities they wanted because they didn’t have the symbols of those qualities. Having symbols that are recognized by others goes a long way to convincing us that we really do have the traits we most desire. Remember Sally Field and her Oscar speech for “Norma Rae?” “You like me. You really like me.” She wasn’t sure before that moment that her peers liked her or her work, but that award made their affection real.

“The Wizard gives these characters those symbols, and maybe that was his real magic – making them believe in themselves. Want a heart so that you can feel emotion and be sentimental? Well, how do we know someone has a heart? They get awards, of course. The Wizard gives the Tin Man an award for being a philanthropist because philanthropists have generous hearts. To prove that the Cowardly Lion has “the noive,” the Lion is awarded a medal because bravery earns medals. And what do people with brains have? Why, academic degrees, of course. So Scarecrow gets a degree and begins to spout geometry.”

. . .

 “When you think about how to reward someone, consider something that matches an identity need for affiliation, competence, purpose or autonomy. The Tin Man’s need for affiliation can now be met because he can connect with people through his heart. Scarecrow is competent because he has a degree that says he is. The Lion is brave and has the medal to prove it; he can fulfill his purpose of being king of the jungle. And Dorothy is autonomous. She can go home whenever she wants to.”

. . .

 “Whether you give someone a plaque, or public recognition, or make someone feel part of the group, or acknowledge an odd idea from someone, you are demonstrating a clear understanding of what is important and helping that person to feel recognized and valued. And isn’t that what motivation is all about anyway?”

            Acknowledgment. . . . it goes a long way! In fact, it just may be “priceless”!

            . . .Just something to think about!

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              The other day, I found a new online magazine in my e-mail box. It was the very first edition, Vol. 1, No. 1 (October 2011) of ADR Times Perspectives on Dispute Resolution.According to the message from the Editor – Ms. Mikita Weaver – this publication started out as an interactive blog, gradually shifting to this very first edition of ADR Times.com covering negotiation, mediation, arbitration, diplomacy and peace.

            Reading the publication, I found that many of the articles covered the fundamentals rather than the arcane. For example, Scott Van Soye discussed “The Negotiation Dance: Five Reasons Not to Sit Out” (at pp. 4-5). I have been in many mediations where counsel wanted to speed up the “dance.” Often, my response is that you can’t; if you do try – you will lose that magical something in the process of “dancing” and the negotiations will fail. Mr. Van Soye puts it more concretely, providing five reasons why the parties must dance!

            The first reason, as identified by Professor Peter Robinson (co-director of the Strauss Institute for Dispute Resolution at Pepperdine Law School) is that most agreements are reached at about the midpoint between the first two reasonable offers. To get to this midpoint, social pressure is placed on each party to share the burden of conceding. “Without a pattern of concessions, sometimes called the “negotiation dance”, this mutual pressure is gone.” (Id. at p. 5).

            The second reason is because it is normal to negotiate; “. . .failing to negotiate leaves your counterpart frustrated, angry that you are being “stubborn” or “unfair” and doubtful that you are really at your bottom line.” (Id. at p. 5). Consequently, without the “dance”, even the best deal may not be acceptable.

            The third reason is that a “take or leave it” approach greatly limits your ability to negotiate as well as  your credibility. If your first proposal is your bottom line, if it is not accepted – you must walk away to maintain credibility. If, instead, you offer something else, your credibility is gone.

            The fourth reason is that the “pattern of the dance significantly impacts the ultimate amount agreed upon.” Studies show that the first move in a negotiation strongly influences the other party’s estimate of value. (Id. at p. 5). By anchoring your first demand at a higher (lower), but reasonable amount, the agreement ultimately agreed upon will be higher (or lower). By being the first to make the proposal, you can set the level (or playing field) of expectation.

            The fifth reason involves “the value of aspirations or optimistic goals.” (Id. at p. 5). “Those with high hopes routinely do better than those with more “realistic” ones. Of course, this assumes that the demands are within the realm of possibility. Ridiculous demands will be ignored. (Id.)

            In sum, if you refuse to “dance”, you will definitely be at a disadvantage in any negotiation. You must “dance” to get the most out of the negotiation: it is that plain and simple.

            . . . Just something to think about!

              Time sure does fly! It is that time of year again, and I can’t believe that it has already been a year since I was President of SCMA. The Southern California Mediation Association (“SCMA”) is holding its 23^rd Annual Conference on November 4-5, 2011 in Los Angeles, CA. Entitled “Putting Mediation to Work: Expanding Horizons, Expanding Opportunities”, the conference is different from all previous years. (Conference Flyer) The chair and president elect Barbara Brown has truly thought outside the box by creating two concurrent pre-conference Institutes scheduled for Friday afternoon (November 4, 2011). Institute 1 will explore elder mediation (“Rules, Tools and Ethics for Elder Mediation in the Age of Longevity: Multi-Disciplinary Approaches to Shared Family Decision Making”) while Institute 2 delves into collaborative family law. (“The Synergy between Mediation and Collaborative Practice: How Skills, Roles and Practice Develop Work Together.) And, the presenters are world renown: Kenneth Cloke, Esq. and Marcia Haber, Esq. will discuss Elder Mediation while Forrest Mosten, Esq. and Diana Martinez, Esq. will discuss Collaborative Practice. It will definitively be an informative afternoon.

             The conference itself, on Saturday, November 5, 2011 at the Strauss Institute of Dispute Resolution at Pepperdine University’s Law School in Malibu, includes sessions exploring the many different aspects of mediation: international, intercultural, transformative, ombudsman, online and even conflict coaching. By the end of the day, we will have all learned how pervasive mediation can be in our everyday lives.

              But, to end the day, Ms. Brown has arranged to do so on a very high note – by scheduling Father Gregory Boyle, Founder of Homeboy Industries and nationally recognized for his work, to be the keynote speaker. In further recognition of his valuable contributions, SCMA will award him with its 2011 Peacemaker of the Year Award. I am definitely looking forward to hearing Father Boyle speak: he will energize us all!

            Needless to say, I am attending and hope to see you there!

            . . . Just something to think about! 

            Let us suppose that Jane Jones is driving along one of the many freeways in Los Angeles, and as is typical, the flow of traffic suddenly and abruptly comes to a halt. That is, in a nanosecond, Jane goes from 60 mph to 0 mph. While she is alert and stops in time, the driver behind her, Patricia Smith, is not – she is busy texting. Consequently, Ms. Smith’s vehicle plows into the rear of Ms. Jones’ vehicle, causing Ms. Jones to suffer various and multiple soft tissue injuries.

            Ms. Jones seeks medical treatment, going first to the emergency room to be checked out and then to the chiropractor to be treated. By the time all is said and done, her medical expense is $15,000, but luckily, Ms. Jones has fantastic medical insurance. Her insurer is able to negotiate both with the ER hospital and her chiropractor for a reduced rate and is able to pay $7,500 in full settlement of all medical expenses.

            This being the litigious state of California, Ms. Jones sues Ms. Smith for her injuries and medical expenses. Because of the “collateral source” rule, Ms. Smith cannot obtain an offset or otherwise benefit from the fact that Ms. Jones had fantastic insurance which paid her medical expenses. That is, Ms. Smith can not pay less to Ms. Jones simply because Ms. Jones was prudent enough to have health insurance. Rather, Ms. Jones will be entitled to claim the full amount of her damages from Ms. Smith. (See, Helfend v. Southern Cal. Rapid Transit Dist. (1970) 2 Cal.3d 1,6). But, the question remains: Is Ms. Jones entitled to collect from Ms. Smith the amount of $15,000 actually billed by the ER and her chiropractor – or the amount of $7,500 that was actually paid?

            Over the past twenty years, the appellate courts in California have split on the answer; some ruled Ms. Jones would be entitled to the $15,000 while others have held she would be entitled to only what was actually paid – the $7,500.

            On August 18, 2011, in Howell v. Hamilton Meats & Provisions, Inc., Case No. S179115, (Howell v Hamilton Meats) the California Supreme Court settled the dispute by holding that in such situations, the plaintiff would be entitled to only the amount actually paid out – or $7,500 in our example:

We hold, therefore, that an injured plaintiff whose medical expenses are paid through private insurance may recover as economic damages no more than the amounts paid by the plaintiff of his or her insurer for the medical services received or still owing at the time of trial. (Id. at p. 28.)

            In reaching this conclusion, the court concluded that a defendant – Ms. Smith in our example – is not obtaining a “windfall” “. . .merely because the injured person’s health insurer has negotiated a favorable rate of payment with the person’s medical provider.” (Id. at p. 18). The court reached this conclusion based on a 2005 study of hospital costs (Id. at p. 18) revealing that “[h]ospital charge setting practices are complex and varied.” (Id.) Consequently, the court responded that neither as the full bill that a provider charges represents the “real” value of the services, neither does the “discounted” amount represent an “artificial” or “arbitrary” value. Rather, the court concluded that the discounted amount neither is a “windfall” to the defendant nor acts to encourage the defendant to engage in “risky conduct.” (Id. at p. 22).

            Perhaps, the court’s most realistic appraisal appears at the end of its opinion:

 There is, to be sure, an element of fortuity to the compensatory damages the defendant pays under the rule we articulate here. A tortfeasor who injures a member of a managed care organization may pay less in compensation for medical expenses than one who inflicts the same injury on an uninsured person treated at a hospital (assuming the hospital does not offer the person a discount for its chargemaster prices). But, as defendant notes, “[f]ortuity is a fact in life and litigation.” (Id. at p. 27).

            Or, to quote Forrest Gump, “My momma always said, “Life was like a box of chocolates, you never know what you’re gonna get.”  Forrest Gump (1994).

            . . .Just something to think about!

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