The Expert's Examiner

Contributor: George H. Friedman (George@SecArbAlert.com)
 

(ed: This column follows recent items of interest to securities experts and relating to arbitration practice. These items are drawn from recent editions of the Securities Arbitration Alert (updated where necessary) and appear here with the permission of the Alert’s publisher. This issue’s column is compiled by the SAA’s publisher and Editor-in-Chief, George H. Friedman. Note that all 2021-2024 back issues of the Alert can be downloaded free of charge here.)

A New York City Bar Association subcommittee in June released a report exploring confidentiality in mediation. Mediation Confidentiality in New York State: Overview of the Current Regulatory and Institutional Landscape with Recommendations, was written because: “Unlike a number of other states, New York has not adopted a statewide legal framework governing the confidentiality of information and documents shared during a mediation or legislated a specific ‘mediation privilege.’ Given this fact, several members of the Alternative Dispute Resolution (ADR) Committee, the Arbitration Committee, the International Commercial Disputes Committee, and the Litigation Committee of the New York City Bar Association formed a subcommittee to examine the scope of the confidentiality protections for mediations conducted in New York and determine what, if any, measures should be taken by mediators and legal practitioners to bolster these protections.” The key takeaways are (listed verbatim):          

• Mediators and mediation participants should not assume that all information shared during a mediation is de facto confidential.
• Evidentiary rules applicable in state and federal courts in New York which prohibit the use of settlement discussions for certain purposes provide some measure of incidental confidentiality protection for certain mediation-related communications.
• Each of the mediation programs offered through New York State Courts and federal courts in New York has rules requiring confidentiality of the mediation process for the mediation participants.
• Privately administered mediation forums (e.g., AAA, JAMS) also have rules requiring confidentiality of the mediation process to which participating parties agree to be bound.
• Mediations that are not part of a court program or conducted through an administered entity such as AAA or JAMS—that is, truly private mediations—are not governed by any general confidentiality rule and/or standard mediation agreement covering the participants. Thus, mediators and legal practitioners participating in these types of mediations will want to consider entering into a confidentiality agreement at the outset.
• Mediators and legal practitioners participating in court-adjacent or administered mediations may still consider using a confidentiality agreement to supplement confidentiality protections, for example, to cover third parties coming into contact with mediation communications, who are not specifically contemplated by most of these rules.
• Regardless of the existence of a confidentiality agreement governing a mediation, New York courts have allowed the discovery of certain mediation communications in exceptional and narrow circumstances. Also, persons with no connection to the mediation, including government agencies and officials, and litigants in other cases, may have legal rights to issue a compulsory process such as a subpoena to those who participated in the mediation to learn what happened. Parties to a mediation need to be aware of this risk, although the law governing the parties’ rights to resist and the likelihood that a court would enforce the process is beyond the scope of this report.

(ed: *Well done! **There are no direct references to FINRA. ***The 18-page report in PDF format is here.)

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