Now this is interesting. A plaintiff sues a product distributor in California claiming product-related injuries. She learns of a different plaintiff with a similar claim in New Jersey against the same distributor. She subpoenas the distributor’s New Jersey mediation statement and, guess what—they produced it. Yes, really.
So what happened? The distributor sought to claw-back the mediation statement claiming the mediation privilege protected it. And the court agreed, essentially blocking any waiver argument and chastising the plaintiff for even trying! Lakes v. Bath & Body Works LLC, 2018 WL 2318106 (E.D. Cal. May 22, 2018). You may read it here.
Crystal Lakes sued Bath & Body Works alleging that she suffered burns when one of BBW’s candles “flared” and “exploded.” Lakes learned of similar flaring litigation in New Jersey, and subpoenaed the “litigation records” from the NJ plaintiff’s counsel and BBW’s NJ counsel. Both lawyers produced BBW’s “brief submitted in the mediation or settlement proceedings.”
BBW then filed a motion to claw-back its mediation statement from Lakes’ clutched hands, and Lakes countered with a motion to compel. BBW argued that the mediation privilege required the statement’s return, but Lakes countered that BBW waived the privilege by producing it or, alternatively, that the court should impose a crime–fraud exception to the privilege.
Conflict of Laws
The involvement of NJ (the statement’s location) and California (the forum state) warranted a choice-of-law analysis. The case was in federal court under diversity jurisdiction, so the court correctly applied state privilege law. But which state?
The court reviewed California’s mediation privilege and NJ’s mediation privilege and, finding “no meaningful, substantive conflict,” applied the forum law—here, California.
California’s mediation-privilege statute, Cal. Evid. 1119, protects a mediation statement from discovery unless the mediation participants “expressly agree in writing, or orally … to its disclosure.” Cal. Evid. 1122. Interestingly, NJ’s mediation-privilege statute also contains an “express waiver” exception, but no writing requirement. See NJ Rev. Stat. § 2A:23C-5.
The court found that BBW did not waive the mediation privilege even though both the plaintiff’s counsel and BBW’s counsel produced the mediation statement to Lakes. The court reasoned that neither NJ party waived the privilege and, even if the lawyers could waive it, neither lawyer did so “expressly.”
Lakes’ crime–fraud-exception argument likewise failed because California’s mediation-privilege statute contains no such exception. After that ruling, the court said, in short, “[n]o further analysis need be made.”
But there was further analysis, or perhaps foreshadowing. The court noted that Lakes “is fortunate” that she did not reference the NJ mediation statement at trial because California law allows sanctions for such conduct. See Cal. Evid. 1128. And, in a thinly veiled threat, “[w]hether this trial sanction is one applicable in federal court is an issue plaintiff would probably like to avoid.” Ouch.