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A Texas federal district court held that the mediation privilege under Texas law prohibits a mediator from later testifying on behalf of one of the parties at litigation, even if the mediator's anticipated testimony would not directly reveal any confidential information from the mediation session.
In Duininck Brothers, Inc. v. Howe Precast, Inc., No. 4:06-CV-441, 2008 WL 4411608 (E.D. Tex. Sept. 23, 2008), Duininck sought reimbursement of funds from Howe in connection with a settlement agreement. Howe opposed, arguing that the reimbursement amounts were unreasonable.
In preparation for litigation, Duininck sought to call the mediator from the settlement talks, Grisham, as an expert witness in the reimbursement litigation. Howe objected by bringing a motion to strike, asserting the mediation privilege under Texas law. Tex. Civ. Prac. & Rem. Code 154.053 (forbidding disclosure by the mediator, even to "the appointing court," unless the parties expressly agree otherwise).
Howe argued that it gave Grisham confidential information during the mediation session regarding attorney fees in the settled cases, while Duininck maintained that disclosure was "unimportant" because none of that information would be disclosed in the expert testimony offered at trial.
While the Court acknowledged that the statutory text did not expressly apply to fee disclosure at mediation, the Court found "it is difficult to imagine how [Howe] will not have been unfairly prejudiced by Judge Grisham's participation in this case as an expert."
With no case directly on point, the Court analogized Howe's objections to those by an ex-husband in a divorce proceeding in In re Cartwright, 104 S.W.2d 706, 708 (Tex. App. 2003). In Cartwright, a trial court ordered the parties to arbitrate a property dispute before the same neutral who mediated child custody matters between the parties. The Cartwright court held that the mediator's subsequent service as an arbitrator was not permitted under Texas law because she would be privy to information the parties would not have revealed during mediation had they known she would later serve as an arbitrator.
According to the Court, "[j]ust as a party may reveal information to a mediator that it would not have chosen to reveal to an arbitrator . . . it stands to reason, and with stronger force, that a party would divulge information to a mediator that it would not disclose to an adverse witness in a related case."
Therefore, the Court held that, without Howe’s consent, Grisham could not serve as a witness in the reimbursement litigation. The Court thus granted Howe's motion to strike.
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