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A Court Clash on Confidentiality and Mediation Policy

Mary Novak, February 27th, 2013

The Indiana Supreme Court recently declared that the state’s judicial policy supports “robust confidentiality” in mediation. In doing so, the court vacated a Court of Appeals ruling that would have expanded the circumstances in which confidentiality could be broken to obtain evidence. The two rulings reflect a strong contrast in interpretations of ADR rules and judicial policy toward mediation.

As I discussed in an earlier post, the appellant wished to use evidence from his divorce mediation to show that certain settlement provisions were recorded in error. The trial court did not permit this, and the case went before the Court of Appeals of Indiana.

The appeals court ruled that confidential statements from mediation could be used as evidence under certain circumstances. Indiana rules for ADR and Evidence treat ADR as a type of compromise negotiation. Things said during a compromise negotiation can’t be used as evidence for certain purposes: to prove a party’s liability in court, or to prove that the amount owed is invalid. However, things said in a compromise negotiation, even during a confidential mediation, may be used as evidence in court when they are offered for another purpose. By defining the plaintiff’s request as the traditional contract defense of “amending a mistake” rather than the prohibited purpose, the Court of Appeals found the evidence should be allowed in.

On policy, the Court of Appeals said that while support for mediation and confidentiality are important, this was outweighed by the need to preserve the integrity of the mediation process when there may have been “mistake, fraud and duress.”

In reversing the appeals court and holding that the mediation statements were inadmissible, the Indiana Supreme Court interpreted both rules and policy differently. On rules, they disagreed that the plaintiff’s purpose would justify the confidentiality breach. Instead they said the concept of allowing evidence that was “offered for another purpose” applies only when the evidence would be used for “collateral matters” unrelated to the dispute at the heart of the mediation.

Regarding policy, the Supreme Court compared the Court of Appeals’ support of traditional contract defenses to a similar approach in the Uniform Mediation Act. Under the UMA, courts would balance the need for evidence against the need for confidentiality. However, Indiana has not adopted the UMA, so the court did not follow it.

Instead, the Indiana Supreme Court made a strong statement about the importance of mediation, and of confidentiality within its proceedings. Since state judicial policy “strongly urges the amicable resolution of disputes,” mediation confidentiality deserves strong protection. Where the Court of Appeals had stressed the importance of allowing parties to challenge a bad mediation process, the Supreme Court said that while their policy may sometimes limit access to evidence, the value of compromise and settlement agreements outweighs that risk.

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