This article was also published by the American Bar Association’s Section of Litigation, Alternative Dispute Resolution Committee.
Many states have statutes that create a privilege for mediation communications. There is no parallel federal statute, and federal courts have declined to create a federal common law privilege for mediation communications. Consequently, it is fairly well settled that cases in federal court that involve solely federal law claims do not apply a mediation communication privilege (unless provided for by local court rule), and that federal court diversity cases that involve solely state law claims will apply a state law mediation privilege.
It is more difficult, however, to determine what law controls the mediation privilege in a federal court case involving both federal and state law claims. This issue arose in Wilcox v. Arpaio, 2014 WL 2442531 (9th Cir. 2014), a federal court case involving both federal and state law claims that appeared to have settled in mediation. A dispute arose over whether a binding settlement had actually been reached. The Ninth Circuit held that state law governed whether a settlement had been reached for both the state and federal claims. A question then arose as to whether evidence from the mediation was admissible to determine if a settlement had been reached. The Ninth Circuit ruled that where a case involves both federal and state law claims, and the same evidence will be received on both claims, a federal court is not bound by state evidentiary rules. Thus, the Court ruled that it need not apply the applicable state statutory mediation privilege.
It is not certain, however, that other courts will reach the same result. Once the case settled, one could argue that the only remaining claim was a state law contract claim to enforce the settlement agreement. The Court ruled that it was not bound by state privilege law because there were both federal and state law claims involved, but it is not clear that any federal claim remained once the dispute had been reduced to whether an enforceable settlement had been reached. If a court were to conclude that all that remained was a state contract claim, the state mediation privilege would seem to apply.