Simply put, what is said during mediation stays in mediation. Well, that’s what most people think, but it is not actually that simple. A mediation privilege does exist in California, which means that in general, whatever is disclosed during mediation is considered privileged. (See California Evidence Code § 1119) The benefit of this confidentiality is that it allows parties the ability to speak more freely during mediation, without fear that what they say will affect the outcome of their case. Nevertheless, as with any rule, exceptions exist, and as discussed below, one of the main exceptions to the mediation privilege is a written settlement agreement.
There is a strong basis to protect discussions during mediation; however, there is an equally strong policy argument to promote the enforcement of settlement agreements. If an agreement cannot be disclosed to the court, it can never be enforced, so what would be the benefit of an agreement? California Evidence Code § 1123 applies directly to this issue, which states that settlement agreements, signed by the parties during mediation, are admissible under certain exceptions. If the agreement states that it is admissible or “words to that effect”, if it states that it is binding or enforceable or “words to that effect”, if the parties agree that it is subject to disclosure, or if the agreement is needed to show fraud, duress or illegality, then the settlement agreement can be admissible in court. The tricky part is what does “words to that effect” actually mean?
The meaning of “words to that effect” was recently addressed in Daly v. Oyster, a Second District Court of Appeal opinion, filed on July 29, 2014. In Daly v. Oyster, a marital dissolution petition was filed in 2005. In 2006 the parties attended mediation and entered into a proposed stipulated judgment following the mediation; neither the stipulated judgment nor any other documents were ever filed with the court. Presumably, the parties followed the judgment as though it had been entered. In May 2011, the court dismissed the petition for lack of prosecution. In June 2011, Daly filed a second dissolution petition to enforce the stipulated judgment. Oyster objected to the admission of the stipulated judgment on the grounds that it was protected by the mediation privilege. Oyster assumed that since it was prepared during the course of the mediation, and never filed, it was considered confidential and could not be disclosed to the court.
The Court of Appeal disagreed with Oyster and found that an exception to the mediation privilege applied. The court found that “words to that effect” does not mean specific language must be written, but that if the terms unambiguously signify the parties’ intent to disclose the agreement or be bound by it, that is sufficient. Such was the case in Daly v. Oyster, when the court opined “The parties agreed the court enforce the document, which it could not do unless the document was disclosed to it.”
One way to avoid the problem that arose in Daly is to make sure that there is specific language in your settlement agreement, if achieved through mediation that it is subject to disclosure to the court, enforceable, admissible and binding. Any experienced attorney will meet with their clients before the mediation to review any outstanding questions, this is the perfect opportunity to speak with your attorney about the mediation privilege.