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MEDIATION: Where the Confidentiality Ends

August 1, 2017

There is little room for argument; the information and documents exchanged during mediation are confidential. Rule 8 of the South Carolina Alternative Dispute Resolution Rules provides, in part:

Communications during a mediation settlement conference
shall be confidential…To that end, the parties and any other
person present shall not rely on, or introduce as evidence …
any oral or written communications having occurred in a
mediation proceeding.

But, where does the confidentiality end? The South Carolina Court of Appeals answers the question in Huck v. Oakland Wings, LLC, d/b/a Wild Wing Cafe’, et al...

William Huck slipped and fell while walking into Wild Wing Café. He and his wife filed suit against Wild Wing Café and Avtex, as the building’s owner, among others. Plaintiffs proceeded to trial against Wild Wing and Avtex after reaching a settlement with two other Defendants, the terms of which were not disclosed to the trial court. At the close of plaintiffs’ case, the court granted the remaining defendants’ motion for directed verdict as to Mrs. Huck’s loss of consortium claims. Following the return of a verdict against Avtex only, it filed a motion for judgment notwithstanding the verdict, along with a motion for disclosure of settlement and setoff, or in the alternative, to determine if the settlement with the other Defendants was made in good faith. The trial court denied Avtex’s motions and this appeal followed.

In opposition to Avtex’s motion to disclose settlement, Hucks argued the settlement agreement was protected because it was part of the mediation process. Rejecting Hucks’ argument, the court clarified the document protection in Rule 8 is designed to protect documents prepared for use by the mediator and parties to the mediation. Once a settlement is reached, however, the documents prepared in conjunction therewith are not for the purpose, or in the course of the mediation. Rather, those documents are in connection with the litigation and its conclusion. The confidentially required by Rule 8 is designed to protect the process and disclosure of the settlement documents does not run afoul of that protection.

The court, concluding it is proper to disclose settlement with other parties, turned to Avtex’s motion for setoff and its assertion that plaintiffs allocated a substantial portion of monies paid by the settling parties to the loss of consortium claim, in an effort to deprive Avtex of its rightful setoff. A nonsettling defendant is entitled to credit for amounts paid by another defendant who settles, assuming the settlement is for the same cause of action. When a release or covenant is given in good faith to one of two or more persons liable in tort for the same injury, it reduces the claim against the nonsettling parties in the amount stipulated in the release or in the amount of the consideration, whichever is greater. It also discharges the settling party from contribution to other at fault parties. The setoff must be awarded, as a matter of law, and the trial court must determine the correct setoff. Therefore, it must review the documents to determine the amount and terms of the settlement and to assure it was made in good faith.

Where does confidentiality stop? The confidentiality requirement surrounding mediation is to protect the process, and the requirement stops upon the successful conclusion of the process. Documents memorializing the parties’ settlement reached through mediation may be disclosed. In fact, those documents must be disclosed in a case with multiple defendants. It is the trial court’s responsibility to not only determine the amount and terms of the settlement but to also assure the settlement was made in good faith, thereby falling within the protections afforded by §15-38-50.

Cheryl D. Shoun is a trial attorney and certified mediator whose experience includes construction law, insurance defense, personal injury defense, employment litigation and medical malpractice.