Filed: Jun. 04, 2002
Latest Update: Mar. 02, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT IN RE: ANONYMOUS, Respondents. OFFICE OF THE CIRCUIT No. 01-9543 MEDIATOR FOR THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT, Amicus Curiae. Before the Standing Panel on Attorney Discipline. Argued: December 5, 2001 Decided: March 20, 2002 Before WILLIAMS, TRAXLER, and KING, Circuit Judges. Decided by published per curiam opinion. OPINION PER CURIAM: This attorney discipline action arises out of a dispute over litig
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT IN RE: ANONYMOUS, Respondents. OFFICE OF THE CIRCUIT No. 01-9543 MEDIATOR FOR THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT, Amicus Curiae. Before the Standing Panel on Attorney Discipline. Argued: December 5, 2001 Decided: March 20, 2002 Before WILLIAMS, TRAXLER, and KING, Circuit Judges. Decided by published per curiam opinion. OPINION PER CURIAM: This attorney discipline action arises out of a dispute over litiga..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
IN RE: ANONYMOUS,
Respondents.
OFFICE OF THE CIRCUIT No. 01-9543
MEDIATOR FOR THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH
CIRCUIT,
Amicus Curiae.
Before the Standing Panel on Attorney Discipline.
Argued: December 5, 2001
Decided: March 20, 2002
Before WILLIAMS, TRAXLER, and KING, Circuit Judges.
Decided by published per curiam opinion.
OPINION
PER CURIAM:
This attorney discipline action arises out of a dispute over litigation
expenses between an attorney (Local Counsel) and his client (Client),
which developed following a successful mediation (the mediation)
conducted by the Office of the Circuit Mediator for this Court (the
OCM).1 Local Counsel and Client agreed to resolve their "expense dis-
1
Consistent with Rule 16(B) of the American Bar Association’s Model
Rules for Lawyer Disciplinary Enforcement and the confidentiality pro-
2 IN RE: ANONYMOUS
2
pute" before an arbitral panel sponsored by the Virginia State Bar
(the VSB arbitration). In their submissions to the VSB arbitration,
Client, Local Counsel, and a third party3 (Current Counsel) (collec-
tively, the participants), disclosed information about or relating to the
mediation and also sought responses to interrogatories from the Cir-
cuit Mediator. Upon being informed of these disclosures and the dis-
covery effort, the Standing Panel on Attorney Discipline ordered each
participant to submit briefs and present argument regarding the pro-
priety of their disclosures in light of the confidentiality provisions of
our Local Rule 33. Having considered the various submissions and
heard argument in this matter, we undertake to resolve the following
issues: (1) whether Client, Local Counsel, and/or Current Counsel
breached the confidentiality of the mediation required by Rule 33; (2)
whether sanctions are warranted for any breach; (3) whether and
under what standard the confidentiality of a mediation may be waived
for future disclosures; and (4) whether and under what standard the
mediator may divulge information relating to the mediation. Before
turning to these significant issues, we set forth in some detail the per-
tinent factual background and procedural history underlying this dis-
pute.
vision of Local Rule 33, the Standing Panel on Attorney Discipline
ordered, without objection prior to the commencement of oral argument,
that the proceedings in this matter would be confidential and that all con-
fidential documents submitted in connection with this matter would be
sealed. To protect this confidentiality, we have omitted the names of the
parties and have omitted the identifying characteristics of the mediated
appeal.
2
We refer to the dispute as an "expense dispute" because no disagree-
ment exists with respect to attorney’s fees; instead, the dispute relates
solely to Client’s responsibility to reimburse expenses and costs
advanced by Local Counsel during the federal trial that was the subject
of the mediation.
3
This third party attended the mediation conference as a "friend" of
Client, by consent of the parties and the mediator, and currently serves
as Client’s counsel in the expense dispute. He was not acting in a repre-
sentative capacity during the mediation conference.
IN RE: ANONYMOUS 3
I.
On March 21, 1997, Client retained the services of an attorney to
initiate a Title VII claim for retaliatory firing. In the fee agreement
signed by Client, she agreed to pay attorney’s fees in the amount of
40% of the total recovery if the matter were resolved after trial and
33 1/3% if the matter settled. "In addition to" the attorney’s fees, Cli-
ent agreed to pay all expenses of litigation, out-of-pocket expenses,
and court costs.
In March 1998, the retained attorney hired Local Counsel to aid in
preparation of Client’s trial. The retained attorney advised Local
Counsel that she had obtained a signed fee agreement from Client, but
Client did not execute a separate fee agreement with Local Counsel.
Local Counsel thereafter advanced the majority of Client’s litigation
expenses and costs. On March 28, 2000, the Title VII case was tried
before a jury. After a three-day trial, the jury returned a substantial
verdict in favor of Client, which the district court reduced to comport
with Title VII’s statutory damages cap.4 Both Client and the defen-
dant appealed to this Court.
After filing their notices of appeal, a mediation conference was
conducted before the OCM in December 2000. In attendance at the
mediation conference were Client, Local Counsel, Current Counsel,
the defendant, the defendant’s two attorneys, and the Circuit Media-
tor. All those in attendance agreed to the confidentiality provision of
Rule 33. The mediation conference culminated in a settlement agree-
ment, and this Court entered an order dismissing the appeals.
Subsequent to the mediation conference but prior to the order of
dismissal, the expense dispute underlying the current proceeding
came to light. Client and Local Counsel agreed to resolve the expense
dispute using the VSB arbitration, and Client retained Current Coun-
sel to represent her in the VSB arbitration. On March 1, 2001, acting
in his capacity as Client’s lawyer, Current Counsel submitted several
documents to the VSB arbitration on Client’s behalf, including a copy
of the settlement points of agreement from the mediation conference,
4
Local Counsel had filed a petition for attorney’s fees and costs, which
the district court had not ruled on at the time of the appeal.
4 IN RE: ANONYMOUS
a copy of the typed settlement agreement, and a statement in which
Client described conversations that took place during and after the
mediation conference. Acting in his capacity as a witness at the medi-
ation conference, Current Counsel submitted his own statement
detailing his recollection of certain discussions that took place during
and after the mediation conference.
On March 21, 2001, Local Counsel requested the consent of defen-
dant to the disclosure of statements made during the mediation con-
ference. Defendant, through its counsel, granted consent to the
disclosure "solely for the purpose of the Bar mediation."5 On the same
day, Local Counsel telephoned the Circuit Mediator, informed her of
the dispute concerning the reimbursement of expenses and costs, and
requested her consent to the disclosure of statements made during the
mediation conference. The Circuit Mediator responded that she was
unable to give consent without instruction from this Court, and the
mediator requested Local Counsel to submit a written, specific
request detailing what he proposed to disclose. On March 22, 2001,
prior to gaining consent from this Court, and without presenting any
further request in support of such consent, Local Counsel submitted
several documents to the VSB arbitration, including a statement
wherein he described discussions that he had with Client at the media-
tion conference.
On March 27, 2001, Local Counsel wrote the Circuit Mediator,
reiterating his request for her consent to disclose matters discussed
during the mediation conference and to disclose notes Local Counsel
prepared during the mediation conference. Local Counsel informed
the Circuit Mediator that Client and Current Counsel already had
breached the mediation’s confidentiality, and he asked her to respond
in writing to three informal interrogatories. With respect to the inter-
rogatories, Local Counsel noted that he would supply the answers to
the VSB arbitration panel, and he would not require the Circuit Medi-
ator to appear at the arbitration.6
5
Defendant’s limited consent allowed Client and Local Counsel "to
discuss the terms and conditions of our settlement and to further discuss
the details of the settlement process."
6
The informal interrogatories posed to the Circuit Mediator by Local
Counsel on March 27, 2001, were the following:
IN RE: ANONYMOUS 5
The Circuit Mediator then advised this Court of Local Counsel’s
request for consent to disclosure and his submission of the interroga-
tories. In response, on October 12, 2001, we issued Standing Order
01-01, which provides in relevant part:
All statements, documents, and discussions in [mediation]
proceedings shall be kept confidential. The mediator, attor-
neys, and other participants in the mediation shall not dis-
close such statements, documents, or discussions without
prior approval of the Standing Panel on Attorney Discipline.
Any alleged violations of this rule shall be referred to the
Court’s Standing Panel on Attorney Discipline for a deter-
mination pursuant to Local Rule 46(g) of whether imposi-
tion of discipline is warranted.
Pursuant to this Standing Order, Client, Local Counsel, and Current
Counsel were directed to appear before our Standing Panel on Attor-
ney Discipline to address whether their submissions to the VSB arbi-
tration breached the confidentiality provision of Rule 33. Having been
informed that the Standing Panel was addressing the propriety of the
participants’ submissions, the VSB arbitration stayed all proceedings
regarding the expense dispute until resolution of this matter. The
OCM was then requested to participate in this proceeding as amicus
curiae. Pending order of this Court, we directed the Circuit Mediator
not to divulge information or answer any inquiries relating to the
mediation.
1. Did you hear [Local Counsel] discuss with [Client] that her
litigation expense obligation was to be taken out of [Cli-
ent’s] portion of the recovery, at the mediation in this matter
held in Durham, North Carolina [i]n December[ ] 2000?
2. Did you hear [Local Counsel] waive his or her firm’s entitle-
ment to expense reimbursement or advise [Client] that the
case expenses would be taken out of [Local Counsel’s] con-
tingent fee portion of the settlement?
3. Did you hear [Local Counsel] estimate [Client’s] litigation
and appellate expenses at or about $20,000 (or any other
number) at the mediation . . . in this matter held in Durham,
North Carolina [i]n December[ ] 2000?
6 IN RE: ANONYMOUS
II.
Having outlined the significant facts and procedural history, we
turn to the issue of whether Current Counsel, Local Counsel, and/or
Client breached Rule 33’s confidentiality provision, beginning with
an examination of the Rule at issue. Rule 33 currently provides in per-
tinent part as follows:
Information disclosed in the mediation process shall be kept
confidential and shall not be disclosed to the judges decid-
ing the appeal or to any other person outside the mediation
program participants. Confidentiality is required of all par-
ticipants in the mediation proceedings. All statements, docu-
ments, and discussions in such proceedings shall be kept
confidential. The mediator, attorneys, and other participants
in the mediation shall not disclose such statements, docu-
ments, or discussions without prior approval of the Standing
Panel on Attorney Discipline.
4th Cir. R. 33.7 The participants do not deny that they each submitted
statements to the VSB arbitration revealing information disclosed dur-
ing the mediation conference. Further, Current Counsel and Client
concede that they submitted the settlement agreement itself, as well
as notes regarding the settlement agreement, to the VSB arbitration.
Despite the apparent violations of the plain language of the Rule, the
participants maintain, for a variety of reasons, that their disclosures
did not violate the confidentiality required by Rule 33.
7
Rule 33 was amended on December 11, 2001, following notice and
public comment. The prior relevant text of Rule 33 provided: "Informa-
tion disclosed in the mediation process shall be kept confidential and
shall not be disclosed by a circuit mediator, counsel, or parties to the
judges deciding the appeal or to any other person outside the mediation
program participants." Because the added language merely clarifies the
previous rule, we find it helpful in resolving the current action. To the
extent that the amendment eliminated ambiguity that existed at the time
of the participants’ disclosures, this ambiguity will be taken into account
when determining whether or to what extent sanctions are warranted.
IN RE: ANONYMOUS 7
A.
The participants first argue that their disclosures were not prohib-
ited by Rule 33 because the disclosures did not involve matters cen-
tral to the mediated dispute. The unambiguous text of Rule 33,
however, does not draw the suggested distinction; instead, it prohibits
the disclosure of "[a]ll statements, documents, and discussions." 4th
Cir. R. 33 (emphasis added).8 Moreover, because the confidentiality
provision as written provides clear guidance in the form of a bright
line rule, we decline to adopt an exception allowing for the disclosure
of matters collaterally related to the mediation.
B.
The participants next argue that because their submissions were
made to a confidential forum,9 the submissions should not be con-
strued as violating Rule 33. Again, the unambiguous text of Rule 33
does not provide an exception for disclosures made to a confidential
forum. Rather, it has at all relevant times restricted disclosures "to any
other person outside the mediation program participants." The partici-
pants concede, as they must, that the members of the VSB arbitration
are "person[s] outside the mediation program participants." Thus, the
submissions made to the VSB arbitration panel by the participants
breached the unambiguous text of Rule 33.10
8
Indeed, this language, added in the 2001 amendments to Rule 33,
merely clarified the prior Rule’s equally broad protection of "information
disclosed in the mediation process."
9
Virginia law provides for confidentiality of materials and communica-
tions divulged during a "dispute resolution program." Va. Code Ann.
§ 8.01-576.10 (Michie 2000).
10
We recognize circumstances where confidential material properly
may be divulged to someone other than one of the mediation participants
without obtaining prior consent of the Standing Panel. For instance, as
in cases involving the protection of attorney-client confidentiality, an
attorney is permitted to consult with other employees of her law firm and
with experts or professionals retained by the law firm to aid in the nego-
tiation or structuring of the settlement, such as financial consultants,
without breaching confidentiality. If any person, however, employed
with or by counsel breaches confidentiality, counsel will be held respon-
8 IN RE: ANONYMOUS
C.
Current Counsel also asserts that, because he was not acting as
counsel during the mediation conference and because he was not a
party to the mediated dispute when he attended the mediation confer-
ence, his disclosures did not fall within the scope of Rule 33. At the
time of Current Counsel’s submissions, Rule 33 provided, "Informa-
tion disclosed in the mediation process shall be kept confidential and
shall not be disclosed by a circuit mediator, counsel, or parties to the
judges deciding the appeal or to any other person outside the media-
tion program participants." Rule 33 (emphasis added). As is made
clear by our recent amendment to Rule 33, the term "parties," as used
in the earlier version of Rule 33, is not limited to the formal parties
of the mediated dispute, as Current Counsel asserts, but instead
applies to all participants in the mediation, including attendants at the
mediation conference.11 Moreover, it is significant to us that Current
Counsel is a lawyer, who was made aware of Rule 33’s confidential-
ity provision prior to his participation in the mediation conference,
and who explicitly agreed to abide thereby. Thus, we reject Current
Counsel’s contention that his disclosures did not fall within the scope
of Rule 33.
sible for the breach. See, e.g., Model Rules of Prof’l Conduct R. 1.6(a)
& cmt. 8 (1998) (noting that a lawyer may reveal confidential informa-
tion "for disclosures that are impliedly authorized in order to carry out
the representation"); Model Rules of Prof’l Conduct R. 5.1 & 5.3
(describing lawyers’ responsibility to ensure that employees’ conduct
conforms with relevant rules of professional conduct). Additionally, as
we hold in Section IV.A.1. infra, under some circumstances, it may be
appropriate for the Standing Panel to grant consent for disclosures
regarding a compensation dispute. Cf. Model Rules of Prof’l Conduct R.
1.6(b)(2) & cmt. 18 (providing an exception to confidentiality where an
attorney discloses client information for the purpose of resolving a com-
pensation dispute).
11
For instance, we understand that, in some circumstances, the Circuit
Mediator sometimes allows the parties to the mediated dispute to bring
family members to the mediation conference, but the family members are
advised of Rule 33 and agree to abide by its confidentiality provision.
IN RE: ANONYMOUS 9
D.
The participants also argue that due process requires us to conclude
that their submissions did not violate Rule 33, in that a contrary con-
clusion would deny Client and Local Counsel the right to resolve their
expense dispute. We disagree. Rule 33, in both its current and previ-
ous form, does not deprive participants of a forum for resolution of
disputes; rather; it limits the availability and use of information
gleaned during the mediation in subsequent proceedings. Smith v.
Cromer, 159 F.3d 875, 882 (4th Cir. 1998) ("It is clear that there are
limits upon the due process which is accorded a defendant in present-
ing his defense, and, further, that the right to compulsory process is
not absolute."). Courts routinely have recognized the substantial inter-
est of preserving confidentiality in mediation proceedings as justify-
ing restrictions on the use of information obtained during the
mediation. Calka v. Kucker Kraus & Bruh, 167 F.3d 144, 146 (2d Cir.
1999) (holding that Second Circuit’s rule protecting the confidential-
ity of matters disclosed during mediation barred use of statements
regarding the mediation in a subsequent state court proceeding); cf.
Cromer, 159 F.3d at 882-83 (noting that the due process rights of the
party seeking disclosure of confidential information must be weighed
against the asserted interest in confidentiality and holding that the
defendant’s constitutional rights did not overcome the Justice Depart-
ment’s claim of privilege in maintaining the secrecy of its confidential
informant files). Further, Rule 33 does not and has never precluded
requests for consent to disclosures, as is evidenced by Local Coun-
sel’s attempt to gain the Circuit Mediator’s consent to his disclosures
and our prompt adoption of Standing Order 01-01 subsequent to this
attempt, as well as our decision, in Section IV.A. infra, to grant
waiver of confidentiality where manifest injustice would result.
Accordingly, we reject the participants’ claim that due process ren-
ders the confidentiality provision of Rule 33 unenforceable.
E.
Finally, in addition to their disclosures about conversations that
took place at the mediation conference, Client and Current Counsel
disclosed conversations relating to the mediated dispute that took
place as the participants were leaving the mediation conference. Cli-
ent and Current Counsel claim that these disclosures did not violate
10 IN RE: ANONYMOUS
Rule 33 because they involved conversations that occurred after the
mediation had concluded. Although Rule 33 does not specifically
define the duration of "mediation" for purposes of maintaining confi-
dentiality, it is plain that the "mediation" is not limited to the media-
tion conference, but continues until the mediated dispute has been
either dismissed or is otherwise removed from the OCM. This con-
ception of the duration of mediation is a practical necessity of the pro-
cess itself, in that the mediated dispute is rarely conclusively resolved
during the mediation conference. Instead, the parties to the dispute
often resume mediation, or refine aspects of the settlement agreement,
subsequent to the mediation conference, and many times do so out-
side the presence of the mediator. These conversations and the infor-
mation disclosed therein are entitled to the same degree of
confidentiality as disclosures made during the mediation conference.
Accordingly, until a mediated dispute is dismissed or is otherwise
removed from the OCM, all "statements, documents, and discussions"
relating to the mediation remain within the bailiwick of the OCM and,
therefore, remain confidential.
Thus, despite their various protestations to the contrary, we con-
clude that Client, Local Counsel, and Current Counsel each breached
Rule 33’s confidentiality provision by disclosing information
obtained during the mediation to persons other than the mediation
program participants.
III.
We next turn to the question of whether the violations of Rule 33
committed by Client, Legal Counsel, and Current Counsel warrant the
imposition of sanctions by the Standing Panel. In assessing the sanc-
tions issue, we review the totality of the circumstances, and deter-
mine, first, whether sanctions are warranted, and if warranted, the
severity of any such sanctions. In so doing, we analyze and weigh the
following and other relevant factors: (1) whether the mediator
explained the extent of the confidentiality rules, and the clarity of
such explanation; (2) whether the parties executed a confidentiality
agreement; (3) the extent of willfulness or bad faith involved in the
breach of confidentiality Rule; (4) the severity or adverse impact of
the disclosure on the parties or the case; and (5) the severity or
adverse impact of the disclosure on the mediation program. See gen-
IN RE: ANONYMOUS 11
erally Robert J. Niemic et al., Guide to Judicial Management of Cases
in ADR 104 (Federal Judicial Center 2001) (discussing various con-
siderations regarding the propriety of sanctions).
Applying these factors, we note that the participants agree that the
mediator clearly explained the confidentiality provision prior to com-
mencement of the mediation conference and that they each agreed to
abide by it. Although no one executed a confidentiality agreement at
that time, the settlement agreement, which Client and Local Counsel
both signed, contained a confidentiality provision that provides for
confidentiality as to all of the "terms of the agreement." On the other
hand, at the time of these disclosures, we had not previously inter-
preted the scope of Rule 33, and Current Counsel, as a participant but
not a formal party to the mediated dispute, had some basis, however
modest, for asserting that his disclosures did not fall within the literal
scope of the former Rule’s prohibition. Additionally, Local Counsel
had some basis to believe that his disclosures did not breach confiden-
tiality, in that the Model Rules of Professional Conduct provide an
exception to confidentiality for disclosures of confidential client
information where the disclosures are for the purpose of establishing
an attorney’s entitlement to compensation. Model Rules of Prof’l
Conduct R. 1.6(b)(2) & cmt. 18; Restatement (Third) of Law Govern-
ing Lawyers § 65 (1998).
Weighing these factors and considering the participants’ statements
and submissions before the Standing Panel, we are convinced that
none of the participants intended to violate Rule 33, and we are
unable to conclude that the disclosures were made in bad faith or with
malice. Moreover, the disclosures have not had an adverse impact on
the mediated dispute, and because the disclosures were made to a
non-public, confidential forum, any adverse impact on the mediation
program has been slight. Accordingly, considering the totality of the
circumstances, we conclude that the violations of Rule 33 are not suf-
ficient to warrant sanctions in this case.
IV.
The participants next contend that, pursuant to Rule 33’s provision
allowing participants to seek the Standing Panel’s approval for future
disclosures of confidential information, we should grant a limited
12 IN RE: ANONYMOUS
waiver of confidentiality to permit the VSB arbitration to consider
their previously-submitted disclosures in resolving the expense dis-
pute.12 Local Counsel also argues that we should grant consent for the
Circuit Mediator to submit written answers to the informal interroga-
tories posed in his letter dated March 27, 2001. We address each argu-
ment in turn, setting forth the standard by which we will determine
whether waiver is appropriate in each context.
A.
To determine when the Standing Panel should grant a waiver of
confidentiality to the participants, it is necessary to examine the rele-
vant interests protected by non-disclosure. The assurance of confiden-
tiality is essential to the integrity and success of the Court’s mediation
program, in that confidentiality encourages candor between the par-
ties and on the part of the mediator, and confidentiality serves to pro-
tect the mediation program from being used as a discovery tool for
creative attorneys. In re Lake Utopia Paper Ltd., 608 F.2d 928, 930
(2d Cir. 1979) ("It is essential to the proper functioning of the Civil
Appeals Management Plan that all matters discussed at these confer-
ences remain confidential."); Alan Kirtley, The Mediation Privilege’s
Transition from Theory to Implementation: Designing a Mediation
Privilege Standard to Protect Mediation Participants, the Process
and the Public Interest, 1995 J. Disp. Resol. 1, 9-10 ("Without ade-
quate legal protection, a party’s candor in mediation might well be
‘rewarded’ by a discovery request or the revelation of mediation
information at trial."). As the Second Circuit properly has observed:
If participants cannot rely on the confidential treatment of
everything that transpires during [mediation] sessions then
counsel of necessity will feel constrained to conduct them-
selves in a cautious, tight-lipped, non-committal manner
12
Standing Order 01-01 and Rule 33 each provide that "prior" to the
disclosure of information related to the mediation, the participant must
seek approval from the Standing Panel. Here, although the participants
did not seek and obtain such approval prior to their disclosures, we con-
sider their request for waiver of confidentiality because the avenue for
obtaining waiver provided in Rule 33 and Standing Order 01-01 was
implemented subsequent to the participants’ disclosures.
IN RE: ANONYMOUS 13
more suitable to poker players in a high-stakes game than to
adversaries attempting to arrive at a just resolution of a civil
dispute. This atmosphere if allowed to exist would surely
destroy the effectiveness of a program which has led to set-
tlements and withdrawals of some appeals and to the simpli-
fication of issues in other appeals . . . .
In re Lake Utopia, 608 F.2d at 930. In a program like ours, where par-
ticipation is mandatory and the mediation is directed and sanctioned
by the Court, "the argument for protecting confidential communica-
tions may be even stronger because participants are often assured that
all discussions and documents related to the proceeding will be pro-
tected from forced disclosure." Folb v. Motion Picture Indus. Pension
& Health Plans,
16 F. Supp. 2d 1164, 1176 n.9 (C.D. Cal. 1998),
aff’d
216 F.3d 1082 (9th Cir. 2000).
On the other hand, we must recognize that under certain circum-
stances, non-disclosure may result in an untenable "loss of informa-
tion to the public and the justice system." Sarah R. Cole et al.,
Mediation: Law, Policy & Practice § 9:2 (2d ed. 2001). Thus, in
determining whether waiver is appropriate, we must balance the pub-
lic interest in protecting the confidentiality of the settlement process
and countervailing interests, such as the right to every person’s evi-
dence. In re: Grand Jury Subpoena,
148 F.3d 487, 492-93 (5th Cir.
1998); see also Wilson v. Attaway,
757 F.2d 1227, 1245 (11th Cir.
1985) (holding that the district court did not abuse its discretion by
weighing confidentiality in mediation proceedings against public’s
interest in insuring that "justice [is] done").
We believe that the balance between these interests is best resolved
by disallowing disclosure unless the party seeking such disclosure can
demonstrate that "manifest injustice" will result from non-disclosure.
Cf. Administrative Dispute Resolution Act of 1996, 5 U.S.C.A.
§ 574(a)(4)(A) (1998) (providing that disclosures of dispute resolu-
tion communications are prohibited unless, inter alia, a court deter-
mines that disclosure is necessary to prevent "manifest injustice").
Application of the manifest injustice standard requires the party seek-
ing disclosure to demonstrate that the harm caused by non-disclosure
will be manifestly greater than the harm caused by disclosure.
14 IN RE: ANONYMOUS
In evaluating the harm resulting from non-disclosure, we observe
that in most instances, an expense dispute between lawyer and client
should easily be resolved without reference to settlement negotiations,
primarily because the client is obligated to reimburse advanced litiga-
tion expenses as a matter of the state’s ethics rules, independent of
mediation proceedings. See, e.g., Va. R. Prof’l Conduct R. 1.8(e)(1)
("[A] lawyer may advance court costs and expenses of litigation, pro-
vided the client remains ultimately liable for such costs and
expenses."). On the other hand, where an attorney seeks to establish
his entitlement to reimbursement of expenses, the attorney typically
is permitted to disclose confidential client information.13 Model Rules
of Prof’l Conduct 1.6(b)(2) & cmt. 18; Restatement (Third) Law Gov-
erning Lawyers § 65.
1.
With these general principles in mind, we turn to our application
of the manifest injustice standard to Local Counsel’s and Client’s sub-
missions. Local Counsel and Client agree that disclosure of informa-
tion related to the mediation proceedings is critical to resolution of
their expense dispute. As Local Counsel and Client note, the expense
dispute arose during the mediation conference, and resolution of the
dispute requires disclosures relating to the context of the dispute’s
origination. Additionally, portions of information disclosed during the
mediation may shed light on their understanding of the expense obli-
gation at that time. Specifically, Client contends that the disbursement
of the settlement proceeds between herself and Local Counsel, which
13
As noted earlier, the Model Rules of Professional Conduct provide
that an attorney may disclose confidential client information in a com-
pensation dispute without breaching confidentiality. Model Rules of
Prof’l Conduct R. 1.6(b)(2) & cmt. 18 (1998). Although we recognize
the benefits of such an exception, we conclude that prior to making any
disclosure relevant to a compensation dispute, the attorney must request
and secure the consent of the Standing Panel, in that the mediation pro-
gram has interests beyond those of the lawyer and client. Cf. Henry D.
Levine, Self-Interest or Self-Defense: Lawyer Disregard of the Attorney-
Client Privilege for Profit and Protection, 5 Hofstra L. Rev. 783, 825-26
(1977) (urging that judicial approval be required before a fee-collection
disclosure is made).
IN RE: ANONYMOUS 15
is set forth in the settlement agreement, is evidence that her obligation
to reimburse legal expenses was incorporated into Local Counsel’s
share of the settlement proceeds. In response, Local Counsel argues
that conversations that took place during the mediation conference are
evidence that Client understood that the settlement agreement did not
affect Client’s obligation to reimburse the litigation expenses in any
manner, and he contends that his notes regarding the settlement con-
ference corroborate his assertion that these conversations took place.
Insofar as the mediation conference was the genesis of the expense
dispute and information divulged during the conference is critical to
resolution of the expense dispute, the harm resulting from non disclo-
sure might, in the context of the expense dispute, be substantial.
Further, any harm resulting from disclosure would be slight, in that
the contemplated disclosures will be made to a non-public, confiden-
tial forum, and all of the attendants of the mediation, excluding the
Circuit Mediator, have consented to a limited waiver of confidential-
ity for disclosures relating to the expense dispute.14 Cf. 5 U.S.C.A.
§ 574(a)(1) (allowing for disclosure of confidential settlement infor-
mation where all parties consent to disclosure). Additionally, it is sig-
nificant that little mention needs to be made regarding the mediation
of the substantive merits of the appeal. In light of these consider-
ations, we conclude that Local Counsel and Client have demonstrated
that non-disclosure of limited and relevant information related to the
mediation would cause manifestly greater harm than the disclosure of
such information. Accordingly, we grant conditional consent for
Local Counsel and Client to disclose the following limited material:
(1) conversations that took place during the mediation regarding the
expense dispute and their notes, or portions thereof, regarding the set-
tlement negotiations corroborating these conversations; and (2) the
settlement agreement and notes regarding the settlement agreement,
but only to the extent that these materials explain or relate to the dis-
bursement of the settlement funds. Our consent is conditioned upon
Local Counsel and Client securing from the VSB arbitral panel its
14
The attendants’ consent, excluding the mediator, is limited to disclo-
sures made to the VSB program. The ultimate decision to grant or deny
consent on behalf of the mediator to the other attendants’ disclosures is
vested in the Standing Panel, although the Standing Panel will normally
seek input from the mediator prior to granting or denying consent.
16 IN RE: ANONYMOUS
written agreement to abide by Rule 33’s confidentiality provision. We
caution Local Counsel and Client to adhere strictly to the parameters
of this limited waiver, and we direct that all previous submissions out-
side the confines of this waiver be withdrawn from the VSB arbitra-
tion.
2.
With respect to Current Counsel’s disclosures, our analysis is
impacted by different considerations. In Current Counsel’s submitted
statement to the VSB arbitral panel, he has detailed his recollection
of conversations that he overheard during and after the mediation con-
ference regarding the expense dispute. This submission allows Cur-
rent Counsel impermissibly to act as both an advocate and as a
witness on behalf of Client in the expense dispute, which is forbidden
by the Rules of Professional Conduct of both Virginia and Florida.15
Va. R. Prof’l Conduct R. 3.7(a); Fla. R. Prof’l Conduct R. 4-3.7(a).
Regardless of the extent to which Current Counsel’s statement may
be necessary or helpful in resolving the expense dispute, we decline
to grant consent for him to violate his ethical obligation to refrain
from acting as both an advocate and a material witness on behalf of
Client. If, however, Current Counsel withdraws as Client’s attorney
in the expense dispute, we grant consent for Current Counsel’s disclo-
sures, subject to the same conditions and limitations that we have set
forth with respect to Local Counsel and Client. Assuming that Current
Counsel does not withdraw as Client’s advocate, we direct Current
Counsel to retract all documents previously submitted to the VSB
arbitration in his capacity as a witness of the mediation.
B.
Turning to the question of whether to consent for the Circuit Medi-
ator to divulge information related to the mediation, we observe that
allowing disclosures by the mediator in subsequent proceedings
implicates concerns well beyond those implicated by disclosures of
15
Current Counsel is licensed to practice law in Florida and has not
been admitted to practice law in Virginia. We trust that, before proceed-
ing further as Client’s advocate, Current Counsel will gain appropriate
pro hac vice admission to represent Client in the VSB arbitration.
IN RE: ANONYMOUS 17
16
other participants to a mediation. For example, our granting of con-
sent for the mediator to participate in any manner in a subsequent pro-
ceeding would encourage perceptions of bias in future mediation
sessions involving comparable parties and issues, and it might encour-
age creative attorneys to attempt to use our court officers and media-
tion program as a discovery tool. As noted in NLRB v. Macaluso, Inc.,
618 F.2d 51 (9th Cir. 1980),
If [mediators] were permitted or required to testify about
their activities, or if the production of notes or reports of
their activities could be required, not even the strictest
adherence to purely factual matters would prevent the evi-
dence from favoring or seeming to favor one side or the
other. The inevitable result would be that the usefulness of
the [mediation program] in the settlement of future disputes
would be seriously impaired, if not destroyed.
Id. at 54 (internal quotation marks omitted); Olam v. Cong. Mortgage
Co.,
68 F. Supp. 2d 1110, 1134 (N.D. Cal. 1999) ("Good mediators
are deeply committed to being and remaining neutral and non-
judgmental, and to building and preserving relationships with parties.
To force them to give evidence that hurts someone from whom they
actively solicited trust . . . rips the fabric of their work and can
threaten their sense of the center of their professional integrity."). In
light of these heightened concerns unique to disclosures by the Circuit
Mediator, the threshold for granting of consent to disclosures by the
mediator is substantially higher than that for disclosures by other par-
ticipants. Thus, we will consent for the Circuit Mediator to disclose
confidential information only where such disclosure is mandated by
manifest injustice, is indispensable to resolution of an important sub-
sequent dispute, and is not going to damage our mediation program.17
16
The OCM has requested that we utilize the resolution of this case to
adopt a federal mediation privilege. In essence, a federal mediation privi-
lege would be a rule of evidence to preclude the disclosure of any docu-
ment, discussion, or statement made during mediation. Because we are
able to interpret and apply Rule 33 without the adoption and application
of a federal mediation privilege, we will reserve this issue for another
day.
17
Of course, we do not address the rare case in which the mediator vio-
lates some independent law in the course of conducting the mediation,
18 IN RE: ANONYMOUS
In this situation, Local Counsel has failed to establish that the
expense dispute is incapable of resolution absent the Circuit Media-
tor’s involvement. Further, Client objects to the Circuit Mediator’s
involvement, contending that she will be biased in her responses to
Local Counsel’s inquiries. And the mediation program may be dam-
aged when a party who has been assured of confidentiality subse-
quently faces a disclosure of confidential material by a mediator who
is perceived, rightly or wrongly, as biased. This perception of bias is
the type of damage against which our confidentiality rule, as applied
to the Circuit Mediator, is attempting to protect. Accordingly, we
decline to consent for the Circuit Mediator to respond to the informal
interrogatories posed by Local Counsel or to otherwise disclose confi-
dential information in the expense dispute.18
V.
Based upon the foregoing, we conclude that Client, Local Counsel,
and Current Counsel each breached Rule 33, but we decline to impose
sanctions upon them in the circumstances of this case. We condition-
ally consent to disclosures by Local Counsel and Client, limited to the
expense dispute as set forth above. We deny consent, however, for
Current Counsel to make any disclosures related to the mediation, and
we order Current Counsel to withdraw all materials submitted to the
VSB arbitration in his capacity as a witness, unless Current Counsel
withdraws from his representation of Client. We also decline to con-
sent for the Circuit Mediator to disclose any information or answer
any questions related to the mediation.
SO ORDERED
wherein the mediator certainly could be required to testify at a subse-
quent proceeding. Cf. Virmani v. Novant Health Inc., 259 F.3d 284, 287-
93 (4th Cir. 2001) (holding that hospital’s peer review records were not
privileged from discovery where physician claimed that hospital’s peer
review process was conducted in a discriminatory manner).
18
As with our consideration of whether to grant consent to other atten-
dants’ disclosures, before the Standing Panel would grant consent for the
mediator to disclose information related to the mediation, the Standing
Panel should seek the input of the mediator.
