Legislating ‘Bad Faith’ in Mediation

By Holly Hayes

Steve Mehta wrote a thoughtful and thought-provoking post on bad faith mediation on his blog Mediation Matters. Mr. Mehta references HB 2256, a Texas law that addresses three things as bad faith: failure to participate, failure to have a full authority representative present, and failing to provide necessary information. It authorizes the mediator to report this conduct.

Mr. Mehta notes,

“Interestingly, I do not think a statute like this would pass muster in California due to the limitations that the courts have imposed on the mediator’s ability to disclose information from the mediation. But even if this limitation were removed by statute (as an exception to confidentiality), is it reasonable to ask the mediator to disclose this bad faith action? Isn’t the mediator going to lose all credibility with one side or the other for reporting potential conduct? Moreover, aren’t many cases subject to interpretation. For example, what if a person has authority to settle from an insurance company but is limited by the authority given to him or her by the round table committee? Is that full authority or is that failure to provide a proper person? Is a client’s obstinate refusal to see the lack of merits in its position a failure to participate in the process? And what is necessary information? Does the party have to disclose all information? All relevant information? All unfavorable information? What if the party knows of a case or a theory that would destroy its position, but the other side doesn’t?

The issue of bad faith is very complex and in my humble opinion cannot be defined as easily as the Texas Legislators seem to suggest.”

I agree with Mr. Mehta’s conclusion, “We should be very careful about claiming bad faith, and should be even more careful in legislating bad faith in mediation.”

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Holly Hayes is a mediator at Karl Bayer, Dispute Resolution Expert where she focuses on mediation of health care disputes. Holly holds a B.A. from Southern Methodist University and a Masters in Health Administration from Duke University. She can be reached at: holly@karlbayer.com.