Review of Court Decisions

Dispute Resolution Journal, May-July 2008 | Go to article overview

Review of Court Decisions


WORKER'S COMPENSATION

Mediation Confidentiality/Enforceability of Oral Settlement Agreement

The Utah Supreme Court recently held that settlements reached in mediation must be reduced to writing before a court may enforce their terms. In addition, it ruled that a trial court may not compel the deposition of a mediation participant to determine whether the parties reached an oral settlement.

The case arose out of a workplace injury suffered by Murlyn Reese in May 2000 while employed by Tingey Construction. Tingey's workmen's compensation insurer paid Reese's medical expenses until it went into liquidation. At that point, Utah Property and Casualty Insurance Guaranty Association assumed financial responsibility for Reese's medical costs, and engaged LWP Solutions to pay those costs from Utah Property's funds.

In 2004, Reese sued his employer for negligence. The parties agreed to mediate before proceeding with the lawsuit. LWP attended the mediation to protect Utah Property's interest in any settlement proceeds. Reese claimed that he reached an oral agreement to settle with LWP, and that he relied on that agreement to settle with his employer. However, when the mediator reduced the terms of both agreements into a "memorandum of understanding," LWP would not sign this document, claiming that it contained a term LWP did not agree with. Both Reese and his employer jointly moved to enforce the oral settlement. They sought to depose LWP's representative regarding the contents of the mediation, LWP opposed their motion, arguing that Utah's Alternative Dispute Resolution Act precluded Reese from revealing confidential mediation communications. The trial court ordered a deposition of LWP's attorney regarding the process of the mediation and the conversations and agreements made.

The Utah Supreme Court, granting LWP's discretionary interlocutory appeal, reversed, holding that representatives at the mediation could not be deposed regarding the alleged existence of an oral agreement because LWP did not agree to the disclosure and no exception to the privilege for mediation communications in the ADR Act applied.

The court opined that candid exchanges of information and ideas could be achieved only when the parties were assured that their communications would be protected from post-mediation disclosure. Furthermore, permitting trial courts to sort through mediation communications to determine what is and is not confidential could jeopardize the willingness of mediation participants to negotiate.

Next, the state's highest court held that even though the parties may enter into an oral settlement, trial courts may not enforce oral settlements reached in mediation. To be enforceable by a court, the settlement must be executed in writing. In reaching this result, the court relies on the confidentiality privilege for mediation communications.

The court also cited the principle of party autonomy in mediation. A writing requirement honors that principle, the court said, and provides an added means of producing a durable and workable agreement.

Reese v. Tingey Construction, 177 P.3d 605 (Ut. 2008).

LABOR

Immunity of Arbitral Witnesses

The 2nd Circuit extended common law immunity for individuals testifying in arbitration proceedings that have similar safeguards to litigation, such as an oath and prosecution for perjury.

The case involved a disciplinary action against Police Officer Rolon based on another officer's allegations that Rolon used abusive and profane language. When Robert Henneman became the acting police chief, he suspended Rolon without pay pending resolution of new charges by another officer.

Rolon filed a lawsuit alleging violations of due process and naming the city of Walkill, Henneman and another officer as defendants. The parties settled all issues but back pay, which they then arbitrated. Henneman testified in the arbitration. …

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