Hmmm. I don't know about this one. And the more I think about it, the less I probably agree with it.
There are two opinions, both of which are interesting. First, Justice Bedsworth writes a majority opinion that reverses an award reached at a "binding mediation" agreed to by the parties. He does so by first holding that the parties didn't actually agree to binding mediation because there were two different forms of the settlement agreement, one of which said that any dispute would be "return[ed] to the mediator for final resolution" and another that said that any dispute would be "return[ed] to the mediatior for final resolution by binding arbitration." These are different things, Justice Bedsworth says, so there's no agreement.
But, first, I probably disagree on the merits; if a dispute is returned for final resolution by the mediator, it is by definition "binding arbitration". Hence the parties agreed. Second, the parties also mutually used the term "binding mediation" in a different portion of the agreement, so, again, there's an agreement. Third, if there was any doubt, the mediator testified -- without apparent contradiction -- that he routinely oversees settlement agreements like this, that he explains to the parties what's meant by binding mediation, and that the parties here agreed to this procedure. That seems enough for me. Finally, CCP 664.6 expressly allows resolution of factual disputes in order to enforce written or in-court oral settlements. So why can't the judge below make a permissible factual finding -- amply supported by the record -- that the parties did, in fact, agree to send any disputes to the mediator for final resolution? Seems more than reasonable to me.
So I don't think the "they didn't agree" argument works. Then Justice Bedsworth argues that while some might argue that binding mediation is a good thing, there really aren't any rules for it, yet another reason not to enforce any agreement to such a process. He says: "If binding mediation is to be recognized, what rules apply? The arbitration rules, the court-ordered mediation rules, the mediation confidentiality rules, or some mix? If only some rules, how is one to chose? Should the trial court take evidence on the parties’ intent or understanding in each case? A case-by-case determination that authorizes a “create your own alternate dispute resolution” regime would impose a significant burden on appellate courts to create a body of law on what can and cannot be done, injecting more complexity and litigation into a process aimed at less."
This is a reasonable argument, but I think it's nonetheless wrong. Parties can -- and do -- create their own arbitration processes, and "binding mediation" is no different in this regard. AAA and JAMS/Endispute, for example, have their own individual procedures, to which parties uniformly agree and to which courts have no problem binding the parties. So if we can create and enforce such procedures, we can create idiosyncratic -- and other party-driven -- procedures as well. If the parties want to agree that any disputes get resolved by a turtle race, why can't they? If parties want to agree that any disputes get resolved by a mutual friend, who will resolve the dispute after viewing an interpretive dance performed by both sides, what's the problem? Yes, the judiciary will have to "review" these individual processes, and perhaps resolve disputes about what the parties agreed upon. But we already do this with other "formal" private arbitration processes. And the Republic has somehow survived.
Moreover, there are darn, darn good reasons to enforce precisely the type of "binding mediation" provision that existed here. Justice Sills concurs and notes -- largely correctly, in my mind -- that "binding mediation" is in fact a misnomer, and is merely a kinder, gentler public relations word for a particular type of arbitration -- that it's not really a mediation. True enough. But sometimes there's a reason to use softer, gentler words. I also somewhat agree with the remainder of Justice Sills' concurrence, which explores some of the dangers of binding mediation (e.g., the agreed-upon involvement of a mediator as a backstop arbitrator). But only to a degree; a large part of me disagrees as well. Yes, there are potential problems with such a practice. But there are also major advantages as well; e.g., a substantial reduction in transaction costs as well as resolution by an officer in whom both parties have faith. So, sure, we shouldn't impose binding mediation on the parties. But neither should we prohibit parties from agreeing to it, nor fail fail recognize its many advantages.
My reaction to this case is undoubtedly informed by my own personal experiences. For example, last year, I represented a party in a trademark lawsuit in Delaware that was resolved after a day-long mediation before a federal magistrate and in which the parties agreed to refer all subsequent disputes (of which, of course, there were eventually several) for resolution by the magistrate. Absent such an agreement, there's a real risk that there would have been no settlement; moreover, the involvement of the magistrate in subsequent disputes resolved these matters expeditiously and at minimum cost. It was undoubtedly a rational -- indeed, essential -- means of resolution. Sure, we didn't call it "binding mediation". But that's essentially what it was. Similarly, in a less formal matter, I was also the "intermediary" last year between two warring groups of friends who were in the midst of breaking up their law firm. I was the informal (but recognized) "mediator" in this process, and absent my (incredibly extensive) involvement in the dispute, I'm totally positive that the matter would have promptly degenerated into massive, prolonged, and ugly litigation. Again, at the end of the process, all of the parties agreed that any disputes over either the resulting agreement or the breakup would be submitted to me for resolution. Did the parties expressly agree upon any rules or procedures? No. That was left to me -- I did not feel the need (nor did they) for the parties to spend time any money identifying which specific procedures that would be used in the event subsequent disputes arose.
In both cases, I think that the agreement to "binding" resolution by the mediator was the right call; indeed, I'm sure of it. Does such a process potentially result in some of the downsides identified by Justices Bedsworth and Sills? Sure. But that's why the selection of such a procedure -- like the selection of any other adjudicative procedure -- should be carefully evaluated by the parties. But once they've selected a process, and when (as here) it's a reasonable one, we should affirm and enforce it. So, in the end, I think I disagree with this opinion. It's smart. It's reasonable. It's intelligent. But it's also wrong.
