Is Mediation Privilege Absolute or Qualified? 1

Many incorrectly assume that all evidentiary privileges are absolute, meaning that a party seeking privileged information may not override the privilege despite the level of need.  But several evidentiary privileges are qualified, meaning that a party may obtain privileged information upon a sufficient showing of need.  For example, the attorney-client privilege is absolute and inviolable once established.  But the work-product doctrine is qualified, and a party may obtain the protected information upon a showing of substantial need and an inability to obtain the material elsewhere.

What about the mediation privilege?  mediationThe Uniform Mediation Act, published by the National Conference of Commissioners on Uniform State Laws and accessible here, includes a qualified mediation privilege.  This uniform act provides that a mediation communication is privileged from discovery unless the party seeking discovery shows that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and that the mediation communication is sought or offered in a criminal proceeding or in a proceeding to rescind or reform or a defense to avoid liability on a contract arising out of the mediation. Unif. Med. Act § 6(b).  Some states have adopted the Uniform Mediation Act, including its qualified privilege, while others have adopted it with some modifications.  Other states forego the uniform act in favor of their own mediation rules or statutes.  And in these states, the privilege may arise by statute or in the common law, and may be absolute or qualified.

A recent Indiana Supreme Court decision highlights this distinction.  In Horner v. Carter, 981 N.E.2d 1210 (Ind. 2013), copy available here, a husband sought to modify a divorce settlement agreement and attempted to offer his mediation statements as evidence.  In rejecting evidence of mediation statements, the Court followed the Indiana Alternative Dispute Resolution Rules, accessible here, which include an absolute mediation privilege. Rule 2.11 provides:

Mediators shall not be subject to process requiring the disclosure of any matter discussed during the mediation, but rather, such matter shall be considered confidential and privileged in nature. The confidentiality requirement may not be waived by the parties, and an objection to the obtaining of testimony or physical evidence from mediation may be made by any party or by the mediators.

Interestingly, the Court noted the distinction between Indiana’s absolute privilege and the Uniform Mediation Act’s qualified privilege, and expressly “decline[d] to follow [the uniform act’s] approach to mediation confidentiality at this time.”  Perhaps Indiana will amend its mediation privilege rule to make it a qualified privilege, but at this time the privilege remains absolute.  Practitioners should note this decision, avoid assumptions of an absolute mediation privilege, and know where your state falls on the absolute vs. qualified issue.

Court Refuses to Recognize “Compliance Officer Privilege” in Qui Tam Action

The growing number of corporate compliance officers, most with law degrees and housed in the corporate legal department, will increasingly raise the issue whether some evidentiary privilege protects from compelled disclosure corporate communications with the CCO.  A Texas federal court, interpreting a Texas state statute, refused to find a statutory “compliance officer privilege” that protectscomplianceofficer a CCO’s communications.  U.S. v. Austin Radiological Associates, Inc., 2013 WL 113668 (W.D. Tex. Mar. 18, 2013).

In Austin Radiological, a former employee of Austin Radiological Associates (ARA) brought a qui tam action under the False Claims Act alleging ARA retained Medicare overpayments, wrongfully billed Medicare, and wrongful discharge.  She sought discovery from ARA’s compliance officer, but ARA objected asserting a “compliance officer privilege” under Texas Health & Safety Code § 161.032(e).  This statute provides, in part, that

The records, information, and reports received or maintained by a compliance officer retain the protection provided by this section only if the records, information, or reports are received, created, or maintained in the exercise of a proper function of the compliance officer . . .

The question whether this statutory section created an evidentiary privilege depended upon the court’s statutory interpretation.  Upon review, the court determined that this section incorporated another section (Texas Gov’t Code § 552.005) stating that the “protection provided by this section” did not “create new privileges from discovery.”  The court therefore rejected a statutory “compliance officer privilege” and ordered the CCO’s documents produced.

PoP Analysis.  This decision raises several issues for in-house lawyers and corporate compliance officers.  First, the court and parties applied Texas state law even though the presence of a federal claim could have provided an opportunity to argue for a common law compliance privilege.  Second, the case is silent regarding whether the compliance officer was a lawyer working in ARA’s legal department.  If so, then perhaps an argument that the corporate attorney-client privilege protected the compliance officer’s communications would have proved more successful.  While a few cases address a compliance officer’s privilege in the attorney-client privilege context, the cases are fact-specific and rely on a traditional analysis whether the compliance officer was acting in a legal versus a business capacity.  See, e.g., Leazure v. Apria Healthcare, Inc., 2010 WL 3397685 (E.D. Tenn. Aug. 26, 2010); U.S. ex rel. Parikh v. Premera Blue Cross, 2006 WL 3733783 (W.D. Wash. Dec. 15, 2006).

And finally, this case reminds us that statutory confidentiality rules are not the equivalent of evidentiary privileges.  As courts note, “[c]onfidential does not necessarily mean privileged,” In re Grand Jury Subpoena Dated Dec. 17, 1996, 148 F.3d 487, 492 (5th Cir. 1998), and “confidentiality and privilege are two separate, albeit overlapping, legal concepts.”  Gaumond v. Trinity Repertory Co., 909 A.2d 512, 518-19 (R.I. 2006).

Thought-Provoking Article on Protecting Multi-National Corporations’ Attorney-Client Privilege

In-house lawyers for corporations with headquarters, divisions, facilities, or offices in the United States and a European Union country often exchange privileged information.  For example, an in-house lawyer based at a corporation’sWisconsin U.S. facility may provide a legal opinion based on U.S. law to her in-house counterpart in the corporation’s German facility for use in a global legal strategy .  And while many lawyers assume these communications are perfectly privileged, that is not necessarily the case.  Cross-border communications raise many privilege and conflict-of-privilege law questions that should trouble in-house counsel.

In his thoughtful article, The Privilege Stops at the Border Even if a Communication Keeps Going, 80 S.C. J. Int’l L. & Bus. 297 (2012), David S. Jones identifies the conflict-of-law and related issues that arise when U.S. based lawyers exchange ostensibly privileged communications with their E.U. colleagues.  The article provides a timely review of the major E.U. decision in Akzo v. Nobel  Chemicals Ltd. v. European Comm’n,  which held that in-house attorneys have no attorney-client privilege (legal professional privilege) and that no privilege exists for attorneys who are not members of an E.U. member state bar.  Mr. Jones discusses how a U.S. federal or state court should analyze the conflict-of-privilege law issues in determining whether to apply the restrictive E.U. law to U.S.-based communications.

The scope of evidentiary privileges in E.U. countries is a continually emerging issue for multi-national corporations.  Mr. Jones’ article, which is available at this link, provides a thorough overview of the issues and identifies key points that lawyers and judges should consider when addressing these often first-impression issues.  It is well worth the read.  And for those wanting a conflict-of-privilege law analysis between federal and state and between states, check out my chapter, The Application of Conflict of Laws to Evidentiary Privileges, published in DRI’s Evidentiary Privileges for Corporate Counsel.

My thanks to the South Carolina Journal of International Law and Business and Scholar Commons for permission to link Mr. Jones’ article in this post.