Orlofsky ADR Services

Using mediation to support the fairness of a settlement

Fairness of settlement supported by mediatorWhen court approval of a settlement is required, litigants frequently use mediation to negotiate the settlement, because if successful, the mediator can then provide assistance in obtaining court approval.

In the context of a class action, for example, a recent Ninth Circuit case cited the use of a mediator as evidence that the settlement was the result of arm’s length bargaining and not collusive. In re NVIDIA GPU Litigation, 2013 WL 4734494 (9th C ir. 2013). In the bankruptcy context, a court cited the use of mediation as evidence that a settlement had widespread support among creditors. In re Residential Capital, LLC, 12-12020 (MG), 2013 WL 4874346 (Bankr. S.D.N.Y. Sept. 13, 2013).

These two decisions rely on the mere use of mediation as evidence of the fairness of the settlement, but sometimes litigants ask mediators to provide affidavits attesting to the fairness of the negotiated agreement. In Illinois, there is a question of whether such an affidavit runs afoul of the Uniform Mediation Act (710 ILCS 35/1), which provides:

Sec. 7. Prohibited mediator reports.
(a) … a mediator may not make a report, assessment, evaluation, recommendation, finding, or other communication regarding a mediation to a court, administrative agency, or other authority that may make a ruling on the dispute that is the subject of the mediation.

One could argue that an affidavit on the fairness of a settlement is a report on the settlement, not a report on the “mediation,” but that seems a rather tortured reading of the language. If, however, the parties and the mediator agree to provide such an affidavit, there may be no one to raise an objection based on the Uniform Mediation Act.


In re NVIDIA GPU Litigation

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In re Residential Capital, LLC

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