Mediation Confidentiality

_{An opinion from the Oregon Supreme Court}

_{The issue presented in this case is one of first impression: to what extent do the confidentiality provisions of Oregon’s mediation statutes, ORS 36.100 to 36.238, prevent a client from offering evidence of communications made by his attorney and others in a subsequent malpractice action against that attorney?}

_{…We agree that ORS 36.220 and 36.222 limit the subsequent disclosure of mediation settlement terms and certain communications that occur in the course of or in connection with mediation. We disagree, however, as to the scope of communications that are confidential under those statutes. We also disagree with the Court of Appeals as to whether the trial court erred in dismissing plaintiff’s complaint with prejudice because no responsive pleading had been filed. For the reasons set out below, we affirm in part and reverse in part the decision of the Court of Appeals and remand to the circuit court for further proceedings.}

_{The facts}

_{Plaintiff retained defendant, an attorney specializing in employment law, to pursue discrimination and retaliation claims against plaintiff’s former employer. In the course of that representation, defendant filed administrative complaints with the Oregon Bureau of Labor and Industries and thereafter a civil action against the former employer for damages on plaintiff’s behalf. After limited discovery, plaintiff, represented by defendant, and plaintiff’s former employer entered into mediation under the terms and conditions set forth in ORS 36.185 to 36.210. Before meeting with the mediator and plaintiff’s former employer, defendant advised plaintiff about the potential value of his claims and the amount for which he might settle the lawsuit. Plaintiff and his former employer, along with their respective lawyers and the mediator, attended a joint mediation session and attempted to resolve the dispute. However, no resolution was reached. After the session ended, the mediator proposed a settlement package to the parties. In the weeks that followed, defendant provided advice to plaintiff about the proposed settlement. At defendant’s urging, plaintiff accepted the proposed terms and signed a settlement agreement with his former employer. One of the terms to which plaintiff agreed was that the settlement agreement would be confidential. After the parties signed the agreement, defendant continued to counsel plaintiff and provide legal advice regarding the settlement.}

_{Some months after the mediation ended, plaintiff concluded that defendant’s legal representation had been deficient and negatively affected the outcome of his case. Plaintiff sued defendant for legal malpractice, alleging that defendant had been negligent and had breached his fiduciary duty to plaintiff through his work both on the underlying civil action and the mediation. Plaintiff asserted that had defendant properly and completely pleaded his claims and reasonably prepared for trial he would have received a favorable jury verdict and been awarded substantially more monetary relief than he obtained by settlement. To assert those claims, plaintiff pleaded facts that disclosed certain terms of the confidential settlement agreement and that pertained to communications made by various persons involved in the mediation process.}

_{Specifically, plaintiff’s allegations disclosed facts about the mediator’s settlement proposal to the parties, defendant’s conduct during the mediation, and private attorney-client discussions between plaintiff and defendant regarding the mediation. Those private attorney-client discussions—which occurred outside the mediation session and without the involvement of either the mediator or plaintiff’s former employer—concerned the valuation and strength of plaintiff’s claims, whether plaintiff was obligated to accept the mediator’s proposal and sign the settlement agreement, and whether the agreement was enforceable. Although some of those discussions took place before or while the mediation was still in progress, others occurred when plaintiff signed the settlement agreement or thereafter.}

_{The court concludes}

_{we conclude that the term “mediation communications” includes only communications exchanged between parties, mediators, representatives of a mediation program, and other persons while present at mediation proceedings, that occur during the time that the mediation is underway and relate to the substance of the dispute being mediated. Private communications between a mediating party and his or her attorney outside of mediation proceedings, however, are not “mediation communications” as defined in the statute, even if integrally related to a mediation…}

_{We reverse the Court of Appeals’ determination that the trial court erred in dismissing plaintiff’s complaint with prejudice. The case must be remanded, however, given our conclusion that the trial court applied an incorrect legal standard in ruling on defendant’s motion to strike. On remand, the trial court will have the opportunity to apply the legal standards set out in this opinion to the motion to strike and then consider whether defendant’s motion to dismiss is well taken. If the trial court again dismisses the complaint in its entirety, plaintiff may seek leave to amend. If the plaintiff does so, the trial court may then decide, in its discretion, whether to allow the amendment.}

_{(Mike Frisch)}