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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            In January 2011, in Cassel v. Superior Court (2011) 51 Cal 4th 113 (“Cassel”), the California Supreme Court once again iterated that mediation confidentiality absolutely precludes the admission of anything that occurred during the mediation, in any subsequent litigation. Thus, as in Cassel, where a party alleges that his counsel committed legal malpractice during the mediation, that party is precluded under California’s mediation confidentiality statutes (Evidence Code §1119 et seq.) from seeking any sort of redress for the alleged professional negligence and/or breach of fiduciary duty purportedly committed by her counsel during the mediation.

            Once again, this conclusion was emphasized in a recently unpublished California appellate court decision – Gossett v. St John, Wallace, Brennan & Folan, Second District Court of Appeals of California, Division Eight, Case No. B222502 (May 12, 2011). (Thank you to my colleague Alec Wisner for highlighting this case!). Plaintiff Charles Gossett is a 50 percent shareholder, Chief Official [sic] Officer and Chairman of the Board of CRG Marine Laboratories, Inc. (“CRG”). In 2007, CGR retained a law firm – St. John, Wallace, Brennan, & Folan (“SWBF”) – to advise CGR on employment issues.

            In 2008, one of CRG’s employees, Mark Baker, claimed that CRG owed him unpaid commissions. The parties agreed to mediate.

            At the mediation, CRG’s attorney John St. John took a very passive approach, remaining silent through most of the mediation. Eventually, the parties reached a settlement. St. John produced a settlement agreement that he had prepared in advance of the mediation but had not discussed with Gossett. After Baker modified the agreement and signed it, St. John looked it over and told Gossett to sign it. Gossett skimmed it and signed it. At the time, Gossett did not realize that, he, individually, would be liable for the payment to Baker if CRG did not pay the settlement amount. He realized this only after he requested another attorney review the agreement after the mediation.

            Consequently, Gossett sued SWBF for legal malpractice alleging several alleged errors and omissions by SWBF during the mediation including failing to advise him of his individual liability. SWBF filed a motion to dismiss contending that all of the alleged errors and omissions occurred during the mediation and thus under Cassel v. Superior Court, supra, and California’s mediation confidentiality statutes – Evidence Code §1119 et. seq. – the case must be dismissed: any evidence of what occurred during the mediation is absolutely inadmissible.

            The trial court agreed, granting the motion to dismiss, and the appellate court affirmed.

            Cassel v. Superior Court, supra, is the latest in a long line of rulings from the California Supreme Court holding mediation confidentiality to be inviolate. In light of this latest ruling, efforts are being made to create an exception to mediation confidentiality that would allow for such legal malpractice actions to be brought.  Recently, the Beverly Hills Bar Association (“BHBA”) adopted Resolution 10-06-2011 (RESOLUTION ) which would amend Evidence Code Section 1120 by creating an exception to mediation confidentiality by allowing for disclosure and permitting the use of attorney-client communications made during mediation in a subsequent State Bar Disciplinary action, an action for legal malpractice and/or an action for breach of fiduciary duty. 

            During the upcoming California State Bar Convention in September 2011, the Conference of California Bar Associations will discuss the BHBA resolution and vote whether to approve it. If approved, a legislative sponsor will then be sought for introduction into the California legislature for consideration.

            In Cassel, the Court felt constrained to rule as it did stating:

“We express no view about whether the statutory language, thus applied ideally balances the  competing concerns or represents the soundest public policy. Such is not our responsibility or our province. . . . Of course. the Legislature is free to reconsider whether the mediation confidentiality statutes should preclude the use of mediation–related attorney-client discussions to support a client’s civil claims of malpractice against his or her attorneys.” (Id. at p.136.)

            Many within California will watch the Conference of California Bar Associations to see if it adopts the Beverly Hills Bar Association’s Resolution. In all probability, I and many others suspect that it will do so.  Assuming our collective suspicions are correct, the next issue is whether our legislature will take up the invitation of our Supreme Court to reconsider the issue. To state the obvious, it is a very topical, much debated  issue full of complexities on both sides. (For example, while 11 jurisdictions have adopted the Uniform Mediation Act  containing this exception (see, section 6(a)(5)) in varying forms (including District of Columbia, Idaho, Illinois, Iowa, Nebraska, New Jersey, Ohio, South Dakota, Utah, Vermont and Washington), others view it as a “slippery slope”.) Should the legislature take it up, there will be much in the press about it. Stay tuned for the next installment on mediation confidentiality in California.

            . . .Just something to think about!   

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The other week, I attended an information packed 3 hour training session on how to mediate disputes with high-conflict people (aka “difficult” people). It was given by Bill Eddy, LCSW, Esq., President and Co-founder of High Conflict Institute based in Scottsdale, Arizona (www.HighConflictInstitute.com.)  To say the least, it was interesting.

High-conflict people include those that: (1) may be rigid and uncompromising; (2) have difficulty accepting loss; (3) are unable to reflect on their own behavior; (4) allow their emotions to dominate their thinking; (5) are preoccupied with blaming others; (6) avoid responsibility for solving their problem; and (7) depend on others to solve their problems for them. In sum, they lack self-awareness, are unable to adapt and blame others. They include persons with various personality disorders such as narcissism, borderline, paranoia, antisocial and histrionic.

As explained by Mr. Eddy, all of this boils down to our brains, and more specifically, our right side vs. our left side. The left side of our brain is the “logical brain”. Generally we are conscious of what this side of our brain is up to. It controls language and verbal skills, our ability to organize things, our orientation to details, and our ability to analyze and to seek systematic solutions. In short, it is our “rational” side controlling our positive emotions such as calm and contentment.

On the other hand, the right side of our brain is our “emotional” side governing relationships. It usually operates at our “unconscious” level and is responsible for our creativity, art, intuition, non-verbal skills (or lack thereof), facial recognition and in sum, our “gut” feelings! It also controls our negative emotions such as fear and anger.

In extremely simple terms, a “high-conflict” person is operating from the right side of her brain which houses the “fight or flight” response and other modes of fast defensive thinking such as an all or nothing mindset, emotional reasoning, and jumping to conclusions.

Consequently, in order to get anywhere with a high-conflict person, one must get her to move away from her right brain and into her left brain. To do this, Mr. Eddy suggests a process composed of four skills: bonding, structure, reality testing and consequences.

By bonding, Mr. Eddy suggests that we use empathy, attention and respect (E.A.R.) with the high-conflict person. Acknowledge (although not necessarily agreeing) that she is upset and let her know that you care; connect with her feelings.

In terms of structure, rather than allow the high-conflict person to continuously and continually vent, ask her to turn her complaint into a proposal. A high-conflict person needs a lot of structure; so focus her on the future, rather than the past, and ask for proposals. Have her make lists, again to provide structure.

In addition, provide reality testing, acknowledging that one may never know the full and complete story but that decisions can be made without knowing everything there is to know.

Most importantly, (Mr. Eddy emphasizes) one must reinforce the notion that the dilemma is hers; how does she want to resolve it? Keep the burden on her, rather than allowing her to dump it on you and getting you to resolve her problem for her. Keep putting it back on the high- conflict person.

Finally, Mr. Eddy explains, educate the high-conflict person to the consequences: help her connect the dots between her behavior and its consequences; between cause and effect. Focus on the positive consequences.

In going through this process with high-conflict people, Mr. Eddy suggests that we use a calm, confident, firm voice and body language. He also suggests that as long as the high-conflict person is engaging her right brain, that we stay away from logic. Logic simply does not work in times of stress. Rather, communicate with the high-conflict person in the way that  you want her to relate to you. Studies have shown that people “mirror” behaviors. For example, if I lean forward to show deep interest, the other person will subconsciously mirror my  body language by leaning forward as well.

As you can see, quite a lot of information was packed into this training. The challenge will be not only to try to remember all of these tips but to implement them  the next time they are needed. I will definitely have to engage my left brain to accomplish this!

. . .Just something to think about!

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            One good thing about mediation is that the parties are free to change their minds on any issue as many times as they want during a mediation. . . until they sign a settlement agreement. Once  an agreement is signed, the settlement is extremely difficult, if not impossible, to unwind.

            Earlier this month, the Winklevoss Twins (of Facebook fame) found this out the hard way. In The Facebook, et al. v. Narendra, Case No. 08-16745, the Ninth Circuit Court of Appeals refused to let them back out of a settlement they made with Facebook and Mark Zuckerberg. (Facebook vs Narendra)

            As has been widely publicized, the Winklevoss Twins and Divya Narendara (“Twins”) claim that Mark Zuckerberg stole the idea for Facebook and so sued both Facebook and Zuckerberg in Massachusetts. Zuckerberg and Facebook counter-sued in California adding ConnectU as a defendant and alleging that these defendants stole data and tried to steal users.

            The federal District Court in California eventually dismissed the Twins due to a lack of jurisdiction but then ordered the parties to mediate their dispute.

            Prior to the mediation, the parties signed a Confidentiality Agreement stipulating that

 “. . . all statements made during mediation were privileged, non-discoverable and inadmissible “in any arbitral, judicial or other proceeding.” ” (Slip Opinion at p. 4902).

            After a day of negotiations, the parties signed a handwritten, one and a third page “Term Sheet and Settlement Agreement” (“Term Sheet”). Therein, the Twins agreed to give up ConnectU in exchange for $20 million in cash and $45 million in shares in Facebook (now estimated to be worth about $200 million.)  (See, Los Angeles Times April 21, 2011 article.)

            However, the negotiations fell through during discussions on the final deal documents. Facebook filed a motion to enforce the settlement. ConnectU opposed the motion arguing that the Term Sheet was not enforceable as it lacked material terms and was procured by fraud. The trial court found the Term Sheet to be enforceable and ordered completion of its terms.

            The Ninth Circuit agreed, affirming the trial court’s order. As part of the settlement, Facebook was to acquire all of ConnectU’s shares in exchange for cash and a percentage of Facebook’s common stock. To accomplish this, the attorneys drafted more than 130 pages of documents typically required to finalize an acquisition. 

            On appeal, the Twins argued that if the terms set out in these voluminous acquisition documents were “required” and “typical”, then they should have been included in the Term Sheet; because they were not, it is unenforceable.

            The Ninth Circuit rejected this argument finding that the Term Sheet complied with the requirements of California contract law.

            Next, the Twins argued that Facebook misled them as to the value of its stock. An internal valuation prepared to comply with the federal tax code put the value at $8.88 per share. In contrast, the Twins claimed they were led to believe that the value was four times as much and so were defrauded.

            The Court rejected this argument noting:

       “The Winklevosses are sophisticated parties. . . . They engaged in discovery, which gave them access to a good deal of information about their opponents. They brought half-dozen lawyers to the mediation. Howard Winklevoss – father of Cameron and Tyler, former accounting professor at Wharton School of Business and an expert in valuation – also participated. A party seeking to rescind a settlement agreement by claiming [fraud] under the circumstances faces a steep uphill battle (citations omitted). Id. at p. 4906.

            Finally, the Ninth Circuit addressed the issue of mediation confidentiality, but only superficially. It agreed that the trial court was correct to reject the proffer of certain evidence by the Twins about what was said and not said during the mediation, in light of the Confidentiality Agreement signed by the parties. The Ninth Circuit though did not delve into a discussion of mediation confidentiality, its purpose and importance. It simply concluded:

“. . .The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor, they made a deal that appears quite favorable in light of recent market activity. See Geoffrey A. Fowler & Liz Rappaport, Facebook Deal Raises $1 Billion, Wall St. J., Jan. 22, 2011, at B4 (reporting that investors valued Facebook at $50 billion – 3.33 times the value the Winklevosses claim they thought Facebook’s shares were worth at the mediation). For whatever reason, they now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.”

            In sum, signing on the dotted line means that the matter is  truly over!

            . . .Just something to think about!

 Postscript:  A couple of weeks ago I wrote a blog entitled “An American Hero” about Kenneth Hughey who had been a POW in Vietnam at the Hanoi “Hilton”. Recently, I received an e-mail from a reader who, as a young boy, wore a bracelet with Ken’s name on it as part of America’s effort to support our Vietnam POW’s. He kept the bracelet all these years and offered to return it to him. Ken wrote him an e-mail, accepting the offer. Wow!… the wonders of the internet!

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