What is “Good Faith”?

Recently, I conducted a mediation in which defense counsel was very candid with me by advising that she was there only because the court ordered the mediation and  her client would just assume take the matter to trial.  In this connection, she further advised that  her  client has been taking a very aggressive approach to being sued and is willing to take matters to trial rather than settle simply to avoid the time and expense of litigation. As you may suspect, the authority that she had for settlement was minimal and probably, in plaintiff’s view, insulting.

This admission prompted an esoteric inquiry in my mind:  was the defendant and its counsel attending the mediation in “good faith.” Black’s Law dictionary defines “good faith” in several ways:

A state of mind consisting in (1) honesty in belief or purpose; (2) faithfulness to one’s duty or obligation; (3) observance of reasonable commercial standards of fair dealing in a given trade or business, or (4) absence of intent to defraud or to seek unconscionable advantage.  (Black’s Law Dictionary (2d pocket ed., St, Paul, Minn. 2001 at p. 307)

 

Applying this definition, it would certainly seem that the defendant and counsel  attended the mediation in “good faith”. As they explained to me, they honestly believed that they had no liability in the matter and thus could win the case at trial.  In their view, what plaintiff was complaining about in the vehicle (Naturally, this was a lemon law case.) was the vehicle operating as designed so that nothing was defective.  Defense counsel believed she was being faithful to her duty and obligation to represent her client to the best of her ability and zealously within the bounds of the law. That is, she had a “good faith” reasonable belief in the merits of her client’s position based on the evidence to date. And, no doubt, the defendant, itself, believed that it was complying with reasonably commercial standards of fair dealing with its customers in that, in its view, there were no defects in the vehicle and so no need to repurchase the vehicle or offer the plaintiff more than a minimal sum in recompense. And, finally, the defense did not demonstrate an intent to defraud or seek unconscionable advantage based on its very candid conversation with me. After that conversation, I invited defense counsel to speak to plaintiff’s counsel about the matter and again, defense counsel was as candid with plaintiff’s counsel as she had been with me.

But, I can see from Plaintiff’s view point, merit in the contention that the defense was not at mediation in” good faith” given its hardened stance on settlement and the minimal amount of authority it brought to the table. Plaintiff was probably asking why did defendant bother to attend mediation (other than the fact it was ordered to do so) given its nuisance value authority.

When I asked some of my colleagues how they would define “good faith”, one of them said that as long as the parties do not start going backward in their negotiations, they are operating in “good faith” no matter what their respective positions.  Another asked me, whether in practical terms, does it really matter?  The parties either settle or don’t; they either want to settle or don’t want to. It should not matter to the mediator who is there to assist the parties in doing whatever they want to do with their dispute.

So… I am not sure how to define “good faith” except to say that its definition most likely is in the eyes of the beholder.  When one party accuses the other of “bad faith”, the latter may take umbrage and disagree strongly based on the facts and evidence as she knows it. Or, as one of my other colleagues noted; “good faith”/ “bad faith” is something that can’t really be defined; one just knows it when they see it (to paraphrase Justice Potter Stewart in Jacobellis v Ohio (1964) 378, U. S. 184, 197 in his concurring opinion that while he cannot define “hard -core” pornography, “I know it when I see it.”)

… Just something to think about.

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By |2018-03-23T15:49:44+00:00April 13th, 2018|Mediations|1 Comment

About the Author:

Phyllis Pollack
Phyllis G. Pollack, Esq. the principal of PGP Mediation (www.pgpmediation.com), has been a mediator in Los Angeles, California since 2000. She has conducted over 1700 mediations. As an attorney with more than 35 years experience, she utilizes her diverse background to resolve business, commercial, international trade, real estate, employment and lemon law disputes at both the state and federal trial and state appellate court levels. Currently, she is the in­coming chair of State Bar of California’s ADR Committee. She has served on the board of the California Dispute Resolution Council (CDRC) (2012­2013), is a past president and past treasurer of the SCMA Education Foundation (2011­2013) and a past president (2010) of the Southern California Mediation Association (SCMA). Ms. Pollack received her BA degree in sociology in 1973 from Newcomb College of Tulane University and her JD degree from Tulane University School of Law in 1977. She is an active member of both the Louisiana and California bars. Pollack believes that it is never too late to mediate a dispute and recommends mediation over litigation as it allows the parties to decide their own solutions.

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