The Success Of The SDNY Mediation Program

The Mediation Program of the SDNY provides litigants in commercial litigation with an opportunity, generally early in their litigation, to resolve their disputes without going through the expense of full-blown discovery and the uncertainty of trial. 

As reflected in the Mediation Program’s recently released Annual Report , individual judges referred 113 cases in general civil litigation (which does not include employment and civil rights claims).  Of that number, a successful resolution in mediation came about in 60% of the cases referred, an increase from 53% in 2012.  Considering the determination with which business disputes are litigated, a 60% successful rate is a remarkable achievement. 

Local Civil Rule 83.9, effective January 1, 2014, and other actions taken by the Court, have resulted in a more flexible, streamlined operation.  For example, in 2013, mediations could be conducted in the mediator’s law office for the first time. In certain circumstances, conducting the mediation in an office, rather than at the courthouse, may result in greater convenience to the parties and their clients. It certainly makes the mediator’s job easier. 

Rebecca Price, the Mediation Supervisor, has shared with the 396 pro bono mediators in the program some of the favorable feedback she has received from program participants.  Some comments from lawyers include the following:

“I think the mediator did a great job helping me where he presented me with
alternative strategies in going back with counter offers, and why they
should be higher rather than lower. Most of the numbers I presented were
fair, but the case had some problems and though I think my client should
have been offered more money – the final number was fair, and the employer
threw in a positive recommendation, something I’d never seen before. All in
all I felt it was a fair settlement and I learned from the mediator.”

“Given that opposing side had not responded to any attempts at negotiation
over several months, this was necessary and we accomplished in 3 hours what
we could not in several months.”

“The mediator and the Mediation Program were instrumental in settling the
case, which occurred the day after the second mediation session.”

“The mediator was very gracious with her time, and patient with the
parties. She was very helpful and her efforts are appreciated.”

Mediation can be particularly effective in resolving business disputes because counsel can structure an agreement that contains important business terms that, if the case proceeded to trial, would not necessarily come to the court’s or the jury’s attention.  The resolution of a business dispute can involve crafting precise terms, particularly when the parties have had a course of dealing over a long period of time.  The very best outcome in the mediation of a commercial dispute is one that satisfactorily resolves the matter and permits the parties’ business relationship to continue. 

Chuck Yeager’s Sham Affidavit Not “the Right Stuff”

Practitioners should be cognizant of the “Sham Affidavit” rule and how it can be applied to self-serving attempts to manufacture issues of fact for the purpose of defeating summary judgment. In an excellent article titled, “Ignorance Is Not Bliss: ‘Sham Affidavit’ In 9th Cir." published in Law 360 on October 29, 2012, Jones Day lawyers,Eric K. Swanholt, Michael S. McCauley and Craig M. Hirsch, discuss the Ninth Circuit’s reaffirmation of the “Sham Affidavit” rule in Yeager v. Bowlin, 693 F.3d 1076 (9th Cir. 2012).  

As discussed by the trio of Jones Day authors, every lawyer has no doubt sat through a deposition where a witness answers question after question “I don’t recall… I don’t recall… I don’t recall.” Even after being shown documents designed to refresh the witness recollection, the witness fails to recall the most basic facts concerning his claim. In Yeager v. Bowlin, the Ninth Circuit recently strengthened a weapon for combatting the forgetful witness. The “Sham Affidavit” rule states that “a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony.” The rule prevents a party from supporting or opposing the motion with a declaration attesting to facts that directly contradict the witness’s deposition testimony.

The Yeager case presented a somewhat new twist to the “Sham Affidavit” scenario. In Yeager, the plaintiff testified at deposition that he did not recall particular facts. Can the “Sham Affidavit” rule thwart the plaintiff from later recalling those same facts in a declaration opposing summary judgment? The Ninth Circuit answers this question in affirmative, holding that the rule applies when the forgetful witness suddenly remembers significant events in his declaration. 

The plaintiff in Yeager v. Bowlin was legendary test pilot Chuck Yeager, who was the subject of Tom Wolfe’s classic 1979 book on the American aviation industry, The Right Stuff.  Later, Sam Shepard played Chuck Yeager in the heralded screen version in 1983.

In Yeager v. Bowlin, Yeager sued former friends who owned a company specializing in the sale of aviation-related memorabilia. Yeager claimed that the Bowlins exceeded the scope of a limited consent to use his name and likeness to sell Chuck Yeager memorabilia. At his deposition, Yeager responded “I don’t recall” in response to 185 questions.

As Todd M. Noonan, the defendant’s lawyer, argues in his brief before the Ninth Circuit, “Yeager obstructed all meaningful inquiry at his deposition with his pat response, ‘I don’t recall.’ The subsequent submission of a detailed, substantive declaration in opposition to the motion for summary judgment represents exactly what the “Sham Affidavit” rule is intended to prevent. Despite suing for fraud, for example, Yeager did not recall whether the Bowlins made any initial representations. Despite asserting breach of oral contract, Yeager had no recollection of the supposed agreements. Despite asserting a claim for breach of written agreement, Yeager did not recall any written contracts with the Bowlins".

Based upon his deposition record, defense counsel argued that Yeager obstructed all meaningful inquiry into the material facts. His testimony amounted to the direct statement that he had no recollection of any facts relevant to his claims.” 

Yet, when faced with a dispositive motion, “Yeager’s memory came flooding back” – a miraculous restoration which the trial court deemed “unbelievable.” Although Yeager claimed that his recollection had somehow been refreshed by several documents, these documents were not attached to his affirmation. Moreover, no expert or medical declaration was filed attesting to any memory lapse or confusion suffered by Yeager as a result of age.

In its holding, the Ninth Circuit cautioned that courts should not disavow a declaration as a sham due to minor contradictions between the deposition and the declaration. Such minor inconsistencies might result from honest mistake, newly discovered evidence or credibly refreshed recollection. For the rule to apply, the “inconsistency between a party’s deposition testimony and subsequent affidavit must be clear and unambiguous.”  Some form of the "Sham Affidavit" rule exists in many jurisdictions around the country.  Both the Ninth Circuit decision and the Defendant’s Ninth Circuit brief contain references to many of these precedents outside the Ninth Circuit. 

 In light of Yeager, Swanholt, McCauley and Hirsch provide valuable lessons for practitioners preparing a witness for or defending a deposition:

 1. Witness preparation is of paramount importance. To avoid being the target of a “Sham Affidavit” contention, it is necessary that the practitioner properly prepares his client prior to a deposition and to familiarize him or her with all key documents;

 2. Counsel taking the depositions of a “I-don’t-recall” witness must explore any excuses the witness can later use to justify a newfound recollection of events. Are there particular documents the witness would ask for if she or he wanted to have his or her recollection refreshed? What efforts did the witness make to prepare for the deposition, including the identification of documents reviewed? Conversely, if you are defending the deposition of a witness who repeatedly answers, “I don’t recall,” or does so on a key point, it may be necessary to ask pointed questions on redirect; and

3. Finally, Yeager is instructive for parties submitting a declaration that arguably contradicts prior deposition testimony. It is necessary that such a declaration provides a “sufficiently reasonable” explanation for any inconsistencies with prior deposition testimony. Chuck Yeager provided no specifics about the documents he purportedly reused to refresh a recollection, did not attach those documents to his declaration, and did not provide any other explanation for his initial inability to remember key facts.

Considering his remarkable legacy in the field of American aviation, it is sad that, at the very end of his career, Chuck Yeager did not have “the right stuff.”

The Confidentiality Of Mediation In New York May Not Be Assured

New York mediator, Richard S. Weil, poses the question in his New York Law Journal article, dated October 25, 2012, “Is Mediation Confidential in New York?”

As Mr. Weil observes, confidentiality is a critical element in a mediation. Confidentiality allows participants to speak frankly without fear that their statements and admissions will be used against them if the case goes to trial. However, mediation may not always be confidential in New York and prudent measures may be appropriate in certain instances to assure the confidentiality of a mediation proceeding. There is no state statute that assures confidentiality.

Local court rules, in both state and federal courts, offer varying and often different levels of confidentiality protection. Similarly, private mediation agreements vary in their terms. the court decisions that have addressed mediation confidentiality do not provide clear guidance. What exactly is subject to confidentiality? What can or cannot be used outside of the mediation? In the EDNY and the SDNY, there are broad guidelines concerning what must remain confidential and litigants in these courts can be assured that  the confidentiality of mediation proceedings will be protected.  But many mediations are not court-annexed proceedings.

What about proving and enforcing mediated settlement agreements? A well-drafted settlement agreement provides that settlement agreements are admissible in evidence as an exception to confidentiality in order to enforce them, but may a party use confidential information to prove the existence of an oral agreement? Do rules concerning mediation confidentiality permit the court to admit evidence of what occurred during the mediation if one party claims to have settled as a result of fraud, duress or mistake during the mediation?

In summary, there is no iron clad guarantee. The practitioner should not take confidentiality for granted, but review the rules of the court or administrative organization (eg. JAMS, CPR, NAM) in advance of a mediation to evaluate how comprehensive those rules are.

As a practical matter, Mr. Weil recommends several ways to protect confidentiality: (1) disclosing confidential information to the mediator only in private caucuses; (2) labeling documents “Confidential Prepared for Use in Mediation Only”; and (3) incorporating the elements of confidentiality in settlement agreements, but with an exception for enforcement. Even in court-annexed mediation, there is no reason why the parties cannot enter into a private mediation agreement if the parties believe that the court’s rules do not afford adequate protection.