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After being reversed as a matter of law by the state Supreme Court, the California Court of Appeals found no exception to mediation confidentiality either through judicial estoppel or by waiver.
In Fair v. Bakhtiari, No. A100240, 2007 WL 1031708 (Cal. Ct. App. Apr. 6, 2007), Fair sued Bakhtiari, alleging cheating in their business dealings. The parties attended a mediation session that culminated in a handwritten memorandum that included a provision for arbitration, stating, "(a)ny and all disputes subject to JAMS arbitration rules."
Following mediation, the parties advised the court that the case had been settled. However, they were unable to finalize the settlement, prompting Fair to file a motion to compel arbitration.
Ultimately, in Fair v. Bakhtiari, 40 Cal.4th 189 (Cal.2006), the Supreme Court ruled that because the agreement lacked an express statement of binding intent, use of the handwritten agreement violated a California Evidence Law protecting mediation confidentiality (see summary of previous decision).
On remand, the Court of Appeals rejected not only the statutory exceptions which had been narrowly construed by the Supreme Court, but also Fair's arguments that Bakhtiari was "judicially estopped" or had waived his right to confidentiality.
More specifically, the Court refused to accept the argument that Bakhtiari was judicially barred from claiming confidentiality primarily because he had never made, nor had the Court accepted, the claim that the settlement terms were admissible.
Finally, the Court ruled that there was plenty of evidence to support the trial court's ruling that no waiver of confidentiality had taken place, including the public policy of protecting confidentiality in order to encourage a frank exchange of views in mediation.
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