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A federal district court in New York ruled that a statement made during mediation, though key to plaintiff’s case, was inadmissible because the parties’ confidentiality agreement provided that none of the matters discussed during mediation could be used as evidence.
In Deluca v. Allied Domecq Quick Service Restaurants, No. 03CV5142(JFB)(AKT), 2006 WL 2713944 (E.D.N.Y. Sep. 22, 2006), Deluca filed an age discrimination complaint with the EEOC against his former employer, Allied Domecq Quick Service Restaurants, the owner of Dunkin’ Donuts. After filing the complaint, Deluca applied to be a Dunkin’ Donuts franchisee. His application was denied.
Shortly thereafter, the parties attended a voluntary EEOC mediation session. The mediation was governed by the Alternative Dispute Resolution Act (ADRA) because it was conducted by a federal agency. The parties also signed a confidentiality agreement providing that “all matters discussed during the mediation [would be] confidential . . . and [could not] be used as evidence in any subsequent . . . judicial proceeding.”
At mediation, Deluca offered to settle the matter if Dunkin’ Donuts would give him a franchise. At that point, Dunkin’ Donuts’ lawyer stated, “We’re not in the process of giving out franchises to people that are suing us or made complaints.”
After the mediation, Deluca sued Dunkin’ Donuts, alleging age discrimination and retaliation in connection with his employment and alleging retaliation in connection with his franchise application. The claims arising from Deluca’s employment were dismissed on summary judgment, leaving only Deluca’s claim that Dunkin’ Donuts retaliated against him by denying his franchise application.
To prove this sole remaining claim, Deluca planned to offer the statement made by Dunkin’ Donuts’ lawyer. Dunkin’ Donuts filed a motion to exclude the statement, arguing that it was protected by the ADRA and Rule 408 of the Federal Rules of Evidence.
The Court found that neither Rule 408 nor the ADRA required exclusion of the statement because those protections are “inapplicable when the claim is based upon some wrong that was committed in the course of the settlement discussions,” and when the statement was made, Deluca had not yet alleged that denial of his franchise application was retaliatory.
The statement was protected, however. Specifically, the Court found that the parties’ confidentiality agreement required exclusion because it afforded broader protection than the ADRA and Rule 408. Accordingly, the Court ruled that Deluca could not offer the statement at trial.
As this case illustrates, courts give significant weight to the confidentiality of ADR proceedings. The confidentiality of compromise negotiations is meant “to encourage full and frank disclosure between the parties in order to promote settlements rather than protracted litigation.” See Olin Corp. v. Ins. Co. of North Am., 603 F.Supp. 445, 449 (S.D.N.Y. 1985).
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