Given the pervasive use of e mail in business and in our lives in general, it is not surprising that a lot of disputes get settled via e mail. Indeed, there is a whole cottage industry including several web sites devoted to on-line dispute resolution.
Consequently, a recent federal district court case provides a cautionary tale about the pit falls of relying on modern technology. In In Re Tft-Lcd (Flat Panel) Antitrust Litigation, United States District Court, (N. D. Cal.), Multi-District Litigation, Case No. M 07-1827 SI, C 12-02214 SI, the Honorable Susan Illston, District Judge held that a settlement confirmed by e mail by a mediator upon acceptance of his mediator’s proposal by all concerned was not admissible and thus not binding and enforceable because it did not contain the magical wording required by California Evidence Code Section 1123.
In June 2010, defendant HannStar Display Corporation ( “HanStar”) pled guilty to a price fixing conspiracy regarding certain TFT-LCD devices sold in the United States. In June 2011, Sony and HannStar agreed to mediate the dispute. The mediation session did not result in a resolution. A few days later, the mediator e mailed a mediator’s proposal to both parties. Each party accepted. Thus, the mediator e mailed both parties advising that a settlement had been reached.
About a month later, HannStar advised Sony that it “could not pay the amount set forth in the mediator’s proposal. ” (Id.) So, Sony sued, eventually filing a motion for summary judgment urging that the e mails taken together formed an enforceable and binding agreement which HannStar breached by failing to pay the agreed upon amount.
After briefly reviewing general mediation principles, the court honed in on California Evidence Code Section 1123:
California Evidence Code section 1123 provides one such statutory exception. This section enumerates four situations in which a written settlement agreement may be admissible:
(a) The agreement provides that it is admissible or subject to disclosure, or words to that effect.
(b) The agreement provides that it is enforceable or binding or words to that effect.
(c) All parties to the agreement expressly agree in writing, or orally in accordance with Section 1118, to its disclosure. .
(d) The agreement is used to show fraud, duress, or illegality that is relevant to an issue in dispute. (Id.)
Noting that the California Supreme Court held in Fair v Bakhiari, 40 Cal 4th, 189, 197 (2006) that ” “…a written settlement agreement arrived at through mediation is only admissible if it “include
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