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5-1-13 – Attorney Work Product Privilege Rather Than Mediation Privilege Protects Documents From Discovery

Posted By Peter Leshaw On April 25, 2013 @ 2:56 pm In Newsletter | Comments Disabled

 DELAWARE BANRUTPCY COURT HOLDS THAT
ATTORNEY WORK PRODUCT PRIVILEGE
RATHER THAN MEDIATION PRIVILEGE
PROTECTS DOCUMENTS FROM DISCOVERY

Are documents used in connection with a privileged mediation immune from discovery?  In a narrow ruling, the United States Bankruptcy Court for the District of Delaware held that the mediation privilege protects documents from admission into evidence but not from production in discovery, while the attorney work product privilege protects those same documents from discovery production.

Background

In Burtch v. Luminescent Sys., Inc.,[1] the Chapter 7 trustee commenced a preference action against two defendants.  The parties participated in a court-ordered mediation.  After commencement of the litigation but before the start of the mediation, the defendants gathered affidavits from two former employees of the debtor, presumably for use in connection with the mediation.  It is unclear from the opinion how the affidavits were used in the mediation. The mediation was not successful.

After termination of the unsuccessful mediation, the parties engaged in discovery.  In response to a request for production of documents, the defendants produced a privilege log which included the two employee affidavits and related documents.  In the privilege log, the defendants asserted that the documents were not subject to production based on both the mediation privilege and the attorney work product privilege.  The Chapter 7 trustee challenged the defendants’ claim of privilege, resulting in the filing of a motion for protective order by the defendants.

The Law

Unlike most other states, Delaware has not codified the mediation privilege.  Delaware Local Bankruptcy Rule 9019-5 does, however, provide a limited mediation privilege:

No person may rely on or introduce as evidence in any arbitral, judicial or other proceeding, evidence pertaining to any aspect of the mediation effort, including but not limited to:  . . . (E) documents prepared for the purpose of, in the course of, or pursuant to the mediation.  .  .  .  Information otherwise discoverable or admissible in evidence does not become exempt from discovery, or inadmissible in evidence, merely by being used by a party in the mediation.

Del. Bankr. L.R. 9019-5(d)(i).  The defendants argued that the contested documents were created for and used in the mediation and were thus not subject to discovery in accordance with the local bankruptcy rules.

Judge Walrath disagreed with the defendants’ assertion of the mediation privilege, reasoning that the local bankruptcy rule does not “protect any documents from discovery” but merely prohibits their introduction into evidence.  Judge Walrath did, however, protect the documents from discovery on the basis that the documents were protected by the attorney work product privilege.

Analysis and Practice Tip

The Burtch case highlights the distinction between information that is discoverable and information that is admissible into evidence.  Federal Rule of Civil Procedure 26(b) provides that “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant.”  Rule 26 has been widely construed to require production of non-privileged documents that are relevant even if the documents would not be admissible into evidence.  Local rules, in contrast, often provide an evidentiary privilege prohibiting the admission into evidence or even disclosure to the court of “conduct or statements made” in connection with a mediation.  Such is the case with Rule 9019-2(F)the local rules of the United States Bankruptcy Court for the Southern District of Florida, which provides a slightly broader privilege than is provided by the Delaware local bankruptcy rules:

Conduct or statements made in the course of mediation proceedings constitute “conduct or statements made in compromise negotiations” within the meaning of Rule 408 of the Federal Rules of Evidence, and no evidence inadmissible under Rule 408, shall be admitted or otherwise disclosed to the court.

Local Rule SDFL 9019-2(F)

Many states (including Florida and New York but not Delaware) also have statutes that may help to shield documents prepared in connection with a mediation from disclosure to the court, though not necessarily production to parties that participated in the mediation.  Those statutes may be applicable in proceedings before federal courts in accordance with Federal Rule of Evidence 501, which provides that “in a civil case, state law governs privilege regarding a claim or defense for which state law supplies the rule of decision.”

A good example of such a statute is Section 44.405(1) of the Florida Statutes:

Except as provided in this section, all mediation communications shall be confidential. A mediation participant shall not disclose a mediation communication to a person other than another mediation participant or a participant’s counsel.

The effect of the Southern District of Florida’s local bankruptcy rule and Section 44.405(1) of the Florida Statutes is likely that a mediation communication, unless protected by some other privilege such as the attorney work product privilege, may be subject to discovery by a party to the mediation but not by an entity not a party to the mediation, and could not admitted into evidence or even disclosed to the court.  This is generally not a bad result.


[1] Burtch v. Luminescent Systems, Inc., Adv. No. 10-55460 (Bankr. D. Del. Dec. 11, 2012).


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