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After being advised by a mediator that a case would not likely settle, representatives with settlement authority do not act in bad faith by leaving mediation early. This is especially the case if they first designate settlement authority upon another representative who is present, according to the United States District Court for the District of Arizona.
In Bauerlein v. Equity Residential Properties Management Corp., No. CIV 04-1904-PHX-SMM, 2007 WL 1521606 (D. Ariz. May 22, 2007), the plaintiff sought to recover reimbursement for the costs of mediation, alleging the defendants acted in bad faith by allowing their representatives with settlement authority to leave the mediation early after less than three hours.
The Court found that the defendants had not acted in bad faith. The Court held the abrupt ending to mediation to be "a culmination of factors such as a vast divergence of the estimates of the value of the claims," a belief by a third party that it was "essentially judgment proof," and mistaken impressions that a third party "intended to offer money toward settlement" and had a representative present with settlement authority.
In addition, the Court found that the departing parties both notified the mediator and conferred settlement authority upon others present before leaving. Furthermore, the Court observed that that mediator had advised one defendant's representative that "the case would not settle...because they were too far apart and had too divergent estimates of the value of their claims."
In closing, the Court emphasized that "[p]art of agreeing to participate in mediation is knowing that it is a process that may end at the occurrence of an impasse."
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