Orlofsky ADR Services

Don’t rely on anything you’re told in mediation

Facebook MediationIt may seem obvious, but don’t rely on any facts and figures or other information provided during a mediation. In The Facebook, Inc. v. Connectu, Inc. (9th Cir. 2011), the parties settled a case in mediation, and then one side then sued the other that claiming they were defrauded in the mediation. (If you’ve seen The Social Network movie, this is the suit by the Winklevoss twins against Zuckerberg.) The court ruled that there can be no fraud claim because a mediation is a confidential proceeding. Since no one can testify as to what happened in the mediation, there can be no proof of fraud.

Also interesting was the court’s ruling on what kind of written document you need at the conclusion of a mediation. The mediation ended with written a statement of the principal terms of the settlement, and the party trying to wriggle out of the deal said that the parties could not agree on the comprehensive settlement agreement, so there was no deal. The court, however, held that the statement of key terms was sufficient, and if the parties could not agree on a final document, the court would oversee the process.