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A federal district court in Ohio ruled that the confidentiality protections of the Uniform Mediation Act applied to an email sent during the mediation phase of a hybrid dispute resolution procedure that first started with arbitration.
In Society of Lloyd’s v. Moore, No. 1:06-CV-286, 2006 WL 3167735 (S.D. Ohio Nov. 1, 2006), Lloyd’s sued Moore for alleged fraud. After the Court granted partial summary judgment, the parties agreed to submit the remaining matters to arbitration and mediation.
Under the Arbitration and Mediation Agreement (the Agreement), the arbitration would occur prior to the mediation, but the arbitrator would not disclose his decision “until and unless the parties reach[ed] an impasse in the mediation.”
The parties selected Lawrence Glassmann to arbitrate and mediate the dispute. At the close of the arbitration, Glassmann rendered a decision but did not disclose it. During the mediation, Glassmann sent Lloyd’s an email discussing the merits of the case and urging Lloyd’s to settle. The Agreement expressly authorized Glassmann, in his role as the mediator, to discuss the merits of the case.
When it became clear that further mediation would not yield a settlement, Glassman disclosed the arbitration award, which was in Moore’s favor. Lloyd’s filed a motion to vacate the award, arguing that Glassmann based the award on matters outside the scope of the Agreement.
In support of its motion to vacate, Lloyd’s relied almost entirely on comments in the email that Glassmann had sent Lloyd’s during the mediation. Moore moved to strike the email, arguing that it was a confidential mediation communication under the Uniform Mediation Act (the Act).
In opposing the motion to strike, Lloyd’s argued that the Act did not apply to the email because it discussed matters outside the scope of the Agreement (e.g., the defense of laches). However, as the Court observed, the Act does not limit its confidentiality protections to “those communications relating to matters the parties specifically and expressly agreed to mediate.”
Lloyd’s also argued that the Act applies only to mediation and not to a hybrid procedure consisting of both arbitration and mediation. The Court rejected this argument for three reasons: (1) when he sent the email, Glassmann was acting solely as a mediator because he had already entered the arbitration award; (2) Lloyd’s cited no case law that would support its narrow interpretation of the Act; and (3) courts have previously applied the Act’s confidentiality protection to hybrid procedures. The Court granted the motion to strike, meaning that the email would not be considered during the subsequent motion to vacate the arbitration award.
A hybrid procedure beginning with mediation would be more efficient since a successful mediation would obviate the need for arbitration. However, if mediation precedes arbitration, the mediator cannot also serve as the arbitrator without compromising the confidentiality of the mediation because it would be difficult for the mediator-turned-arbitrator to ignore any statements made in confidence during the mediation. See Bowden v. Weickert, No. S-02-017, 2003 WL 21419175, *6 (Ohio Ct. App. June 20, 2003) (vacating an arbitration award because the arbitrator “relied on information obtained through his role as mediator when he fashioned the arbitration award”). Many mediators decline to be an arbitrator in a hybrid ADR proceeding for these very reasons.
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