The Clergy Cases & Meddlesome Mediators

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After approximately 90 plaintiffs alleging childhood sexual abuse by several priests brought claims against the Los Angeles Archdiocese (primarily – other defendants were named) the court ordered that a “settlement judge” be appointed to act as mediator. The most recent published opinion in these cases, as of the time of this writing, can be found at Travelers Casualty & Surety Co. v. Superior Court, 126 Cal. App. 4th 1131 (2005).

In Chapter 5 it was pointed out that, on occasion, persons other than the named plaintiff(s) and defendant(s) and their legal teams will have a bona fide interest in attending mediation sessions. In this case, the Church’s liability insurance companies had representatives present at the mediation sessions. Their attendance was proper because they had a genuine interest in the outcome of the case; to the extent that the Archdiocese is found liable (or, in mediation, admits liability), the insurers might have to pay the judgment (or settlement). Therefore, the insurers want to ensure (not “insure”) that all possible efforts are made to prevent a large payoff.

The role played by the “settlement judge” was at issue in Travelers (above). In its discussion, the court uses a definition of mediation which is not dissimilar to the understanding which we have come to:

"[M]ediation is defined as "a process in which a neutral person ... facilitate[s] communication between the disputants to assist them in reaching a mutually acceptable agreement." Although mediation takes many forms and has been defined in many ways, it is essentially a process where a neutral third party who has no authoritative decision-making power intervenes in a dispute to help the disputants voluntarily reach their own mutually acceptable agreement." -Travelers at 1138 – 1139, citation omitted.

It is the lack of any decision-making power on the mediator’s part which caused the most trouble here. In conducting his mediations, the settlement judge (an actual California state judge) was found to, in part, have

“violated the prohibitions against fact finding and coercive conduct….” -Travelers at 1141.

Further, he ruled that part of the settlement proceedings

“constituted an actual trial for purposes of precluding a declaration of coverage forfeiture by the insurers…[and] purported to make binding factual determinations."

He also ruled that the

"Valuation Order could be used as evidentiary fodder for any future bad faith claim by the Church against the insurers.” -Travelers at 1142.

These transgressions are crucial in that they negatively affect the insurers, while a judge who remained a neutral facilitator throughout the proceedings would not have led to such dire results for the insurers. According to the court, the worst result of the settlement judge’s attempt to wield power was that he:

Dangled over the insurers' heads the threat of a bad faith action that was already fortified with the weight of a judge's findings.

"This left the insurers backed into a corner where the easiest way out would be to withdraw their reservation of rights and pay money to settle the cases." -Travelers at 1142.

The result of the court’s findings in Travelers was that the court vacated the Valuation Order based on the settlement judge’s evaluation of the plaintiffs’ likelihood of winning the court case. (Travelers at 1146). The case’s impact, however, might be significantly more far-reaching than that.

Nothing is meant to be suggested here about the settlement judge’s intentions. Nonetheless, the fact that his actions were found to be “coercive” has added fuel to the debate over the lack of a prohibition in the ABA’s Model Code of Judicial Conduct against coercion in alternative dispute resolution. In the June 2005 volume of the ABA Journal, an article titled Meddling in Settling addressed this issue. Judge John W. Cooley, a former U.S. Magistrate, says that “there is a lot of arm-twisting by judges…[and it is] wide-enough spread that we need to do something about it.” John Lande, a law school professor, attributes the problem of judicial arm-twisting to pressure from tremendous caseloads.

Although unrelated to mediators who cross the line, the ABA Journal article also cites a study by Lande and some interesting cases involving parties who participate in mediation but do not do so in good faith, including Lockhart v. Patel, 115 F.R.D. 44 (E.D. Ky. 1987), and In re Acceptable Insurance Co., 33 S.W.3d 443 (Tex. Ct. App. 2000). The general message is clear: participate in settlement proceedings in bad faith at risk of consequences ranging from default judgment being entered against you, to a possible reversal on appeal of any decision issued in your favor.

You might choose to read the ABA Journal article as well as some of the cases mentioned here, and then reconsider the hypothetical in subchapter 1. Did Lesser, the mediator, overstep his bounds? Did he attempt to coerce Nancy to settle?

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