Chapter 30 - § 30.2 • MEDIATION

• Jurisdiction: Colorado

§ 30.2 • MEDIATION

In today's society, legal disputes can consume a company, a family, an individual, an employer, a governmental entity. They are costly, not only from a financial perspective, but also from a personal and emotional perspective. They are time consuming, and can be so distracting to management or to the individual that they impact one's ability to do much else. Mediation is one of the primary ways parties achieve settlement of their disputes.

Alternative dispute resolution methods, including mediation, are not just effective and efficient processes for resolving employment disputes. Colorado attorneys are ethically required to advise clients of alternatives to litigation such as mediation. Rule 2.1 of the Colorado Rules of Professional Conduct states in pertinent part: "In a matter involving or expected to involve litigation, a lawyer should advise the client of alternative forms of dispute resolution that might reasonably be pursued to attempt to resolve the legal dispute or to reach the legal objective sought."

Mediation is a confidential process through which parties to a dispute engage the services of a neutral objective third party to assist them in reaching an agreed-upon resolution of their dispute. It is an alternative to litigation, but is often used in conjunction with litigation to resolve the parties' conflict.³ It presents many advantages over full-blown litigation and trial, including substantial cost savings, and a result chosen by the parties rather than an unpredictable result imposed by a court or jury. However, lawyers often overlook the details in mediation, choosing to approach it as a matter of form, treating all cases in mediation the same. With some advance planning and careful consideration, attorneys can make more out of their mediations and reach a better result for their clients.

§ 30.2.1—Colorado Law Applicable To Mediation Of Employment Matters

The Colorado Dispute Resolution Act, C.R.S. §§ 13-22-301, et seq. (the Act), governs the use of mediation in Colorado.⁴ It applies "to all mediation services or dispute resolution programs conducted in the state," including those conducted by a private mediator. C.R.S. § 13-22-312. In addition to the Act, 44 Colorado statutes address mediation in some manner. The vast majority of these statutes apply narrowly to particular forms of disputes not relevant to employment law. The Act applies more broadly to "all mediation services or dispute resolution programs," including mediation conducted in an effort to facilitate settlement of employment claims and disputes. Id.

Mediation Communications Are Confidential

Mediation communications are confidential. C.R.S. § 13-22-307. Mediation communications are defined as

any oral or written communication prepared or expressed for the purposes of, in the course of, or pursuant to, any mediation services proceeding or dispute resolution program proceeding, including, but not limited to, any memoranda, notes, records, or work product of a mediator, mediation organization, or party; except that a written agreement to enter into a mediation . . . or a final written agreement reached as a result of a mediation . . ., which has been fully executed, is not a mediation communication unless otherwise agreed upon by the parties.

C.R.S. § 13-22-302(2.5).

Questions have arisen as to the extent of the scope of the confidentiality privilege.⁵ In 1991, the General Assembly passed amendments to the Act affecting the scope of the privilege. Before 1991, C.R.S. § 13-22-307(1) stated that "[m]ediation proceedings shall be regarded as settlement negotiations. . . ." Colo. Sess. Laws 1983, ch. 166 at 625. In its place, the General Assembly enacted C.R.S. § 13-22-307(2), which contains a much broader description of the confidentiality privilege. The current version of this privilege was addressed at length by the Colorado Court of Appeals in National Union Fire Insurance Co. v. Price, 78 P.3d 1138, 1141 (Colo. App. 2003). In Price, the personal representative of an estate pursued tort claims against two insurers following the decedent's death in a private airplane crash. Each party was represented by counsel and participated in a private mediation. Following the mediation, the insurers contended that the mediation resulted in a full and final settlement, although the settlement was not reduced to writing. Price, the personal representative of the estate, disagreed that a settlement had been reached and refused to perform in accordance with the alleged settlement terms. The insurers petitioned the trial court to enforce the settlement, and a hearing was held on the insurers' petition.

After hearing evidence that included testimony from the mediator, the trial court concluded that the parties had reached a final, oral agreement during mediation and that the court could enforce that agreement. Price appealed, and the Colorado Court of Appeals addressed the question of the extent of the privilege governing mediation communications. Noting that the 1991 amendments to the Act struck the language equating mediation communications with settlement negotiations, the court concluded that the changes reflected the legislature's intent "to distinguish mediation communication from general settlement negotiations by creating even stronger protections for mediation communication." Id. at 1141. See also Am. Guarantee & Liab. Ins. Co. v. King, 97 P.3d 161, 169 (Colo. App. 2003) ("mediation communications enjoy greater protection than settlement communications under CRE 408"). The court in Price also noted that the legislature's 1991 addition of a definition of "mediation communication" "reinforces the legislature's intent to keep all stages of mediation confidential." Price, 78 P.3d at 1141.

Under Colorado law, it is clear that courts will protect the confidentiality of communications arising in mediation proceedings. Taking both the definition of mediation communication in the Act and the amendments, and the statutory requirement that mediation agreements must be in writing to be enforceable,⁶

these sections express the legislature's intent to create a blanket prohibition against disclosing mediation communication, whether or not the communication concerns a settlement, unless the parties consent or an exception applies. Taking into consideration the bar against admitting mediation communication into evidence, it is logical, therefore, that the existence and terms of a settlement agreement could not be proved without a signed writing that reflects those terms.

Id. (emphasis supplied).

However, the court limited the applicability of Price in the consolidated cases of Yaekle v. Andrews and Chotvacs v. Lish, 195 P.3d 1101 (Colo. 2008). The court ruled that the definition of "mediation communications" does not cover all communications made with an eye to resolving the dispute once the parties have agreed to mediation. Rather, "mediation communications" are limited to those made in the presence of or at the behest of the mediator. Thus, communications or negotiations that concern the dispute but are not connected to specific mediation services proceedings are not contemplated by the definition and, therefore, are not protected as confidential under C.R.S. §13-22-307. Id. at 1109.

One undecided issue is whether the Act's confidentiality — or "mediation privilege" — provisions will apply to the various "ancillary forms of alternative dispute resolution" defined and provided for under the Act. One theory is that other forms of ADR are not cloaked with confidentiality because the privilege language in C.R.S. § 13-22-307 specifically references "mediation." The issue has not been decided in a published appellate decision, but is ripe for legislative action given the Act's objective of promoting the use of both mediation and ancillary forms of ADR.

Settlement Agreements Reached Through Mediation Should Be Reduced to Writing But Common Law Principles of an Oral Agreement May Apply

Section 13-22-308(1) of the Act provides:

If the parties involved in a dispute reach a full or partial agreement, the agreement upon the request of the parties shall be reduced to writing and approved by the parties and their attorneys, if any. If reduced to writing and signed by the parties, the agreement may be presented to the court by any party or their attorneys, if any, as a stipulation and, if approved by the court, shall be enforceable as an order of the court.

In Price, the appellate court concluded that C.R.S. § 13-22-308(1) "describes the only method for obtaining court enforcement of a mediated settlement agreement." Price, 78 P.3d at 1141. This holding, however, was rejected by the Colorado Supreme Court in Yaekle v. Andrews and Chotvacs v. Lish, 195 P.3d 1101 (Colo. 2008), which held that C.R.S. § 13-22-308 does not provide the exclusive means by which parties can form a binding agreement reached after the parties have engaged in mediation. Describing other ways that oral agreements can be enforced in common law, the court stated that the common law of contracts cannot be suspended unless either the General Assembly expresses that intent in the statutory language, or the court can find the necessity of such suspension from the language of the provision. Here, the court found neither circumstance in the language of the Dispute Resolution Act. Thus, the court disapproved Price, holding that -308 "was not meant to limit the ways by which parties may form a binding agreement. Rather, it extends those benefits afforded parties who have litigated an issue to those who have resolved an issue through mediation. Thus, the whole of section 308 merely provides a method of turning an agreement into an order of court; it does not speak to or limit the ways in which a binding agreement can be formed." Id. at 1108.

Applying Colorado law, federal Magistrate Judges in two instances have determined that oral settlement agreements achieved as a result of mediation...