Most mediation contracts include a confidentiality clause providing that all statements made and information exchanged during the mediation cannot be used for any purpose outside of the mediation. But what happens if someone violates that clause?
This question was raised before the Federal Circuit in Higbie v. U.S., 2015 WL 152660 (Fed.Cir. 2015), when, after a failed mediation, the government submitted affidavits to the court citing statements made in mediation. It was undisputed that this violated the contractual confidentiality clause, but the plaintiff sought money damages and the government argued that no monetary damages could be awarded.
The language of the mediation contract was standard issue: “Any documents submitted to the mediator(s) and statements made during the mediation are for settlement purposes only.” A two-judge majority ruled that this language provided only one remedy: exclusion of the material from the court proceeding. They ruled there was no evidence of an intent to provide a monetary remedy in the mediation confidentiality clause.
A dissenting judge, however, said that there was no reason to depart from the default rule that contract provisions implicitly carry a monetary remedy. Given the strong public policy favoring confidentiality in mediation, plus the fact that an after the fact exclusion of statements may be too late to mitigate the damage done, I think the dissent makes the stronger argument. Consider the situation if the government had disclosed the confidential communications to a newspaper instead of just attempting to use them in court. Under the reasoning of the majority, the plaintiff would have no remedy because the court cannot exclude materials from a newspaper once they have been published. It will be interesting to see whether the majority opinion or the dissent prove more persuasive to future courts.