Mediation: Anything You Say CANNOT Be Used Against You in Court

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Business A claims that Business B breached a contract. A wonderful business relationship has soured, a lawsuit has erupted, and the parties are on the brink of spending hundreds of thousands of dollars on litigation. Conscious of these costs, however, the two businesses agree to mediate.

Sure enough, the mediator successfully manages to facilitate open communication, and Business A and Business B freely discuss and admit to many facts, including many that weaken Business A’s arguments. Persuaded by the mediator, the parties ultimately agree to resolve the dispute. They hammer out the terms of the settlement verbally, shake hands, and head home for dinner after a long and exhausting day. The next day, however, Business A has a change of heart. It no longer wants to settle. Can Business B enforce the settlement agreement? Can Business B use in court the statements Business A made during the mediation?

No. Unfortunately for Business B (and fortunately for Business A), the parties find themselves in essentially the same spot they were before the mediation began. This is because, under the Utah Uniform Mediation Act, all conduct and statements made during or in preparation of a mediation —whether written, verbal, or nonverbal—are both privileged and inadmissible as evidence in court. This rule has some exceptions. As you might expect, mediation settlement agreements that are signed by the parties are admissible as evidence in court, and courts can enforce them.

So, if Business A admitted during the mediation that it had breached a key provision of the contract, Business B cannot use this statement to prove its case in court. Similarly, if Business A verbally agreed to pay Business B the amount of $2,000,000 to resolve the dispute, this settlement agreement is utterly unenforceable—unless, of course, it is later put into writing and signed.

Mediation is a special realm where statutory protections promote free and open dialogue. If a mediation does not reach an enforceable settlement, whatever a participant learns in the mediation can be used indirectly to pursue its claims, but it cannot be used as direct evidence in court. This is not a hollow assurance; rather, Utah courts respect the confidential nature of mediations. For example, in refusing to enforce an oral settlement agreement or force an attorney to testify regarding the contents of a mediation, the Utah Supreme Court stated: “We conclude that the content of the mediation is confidential and that mediation agreements must be reduced to writing in order to be enforceable.”[1] A goal of mediation is to his promote the candid exchange of information and ideas, which is only possible if the parties have complete confidence that what they say and do in mediation will not be later used against them.

Not all settlement discussions receive these protections. Generally, to trigger the protections of the Utah Uniform Mediation Act, a neutral mediator must be involved, helping adverse parties talk and negotiate a voluntary settlement. A mediation does not include the situation where two adverse parties get together and discuss settlement options in good faith, without the aid of a neutral mediator.[2] Stated simply, if the parties believe they are mediating and a professional mediator is involved, it is likely a protected mediation.

Mediations can occur without attorneys present, but the mediator’s role is to facilitate settlement discussions, not advise the parties of their legal rights and options. Also, a mediator is going to push for a written settlement agreement at the conclusion of a mediation since nothing less is enforceable under Utah law. Thus, having an attorney present during these pressure situations is invaluable. An attorney will help navigate the settlement discussions and evaluate a potential settlement in light of legal realities and risks.

If you are considering or preparing for a mediation, give us a call. We would love to help.

[1] Reese v. Tingey Const., 2008 UT 7, ¶ 1, 177 P.3d 605, 606. This case relied on the Alternative Dispute Resolution Act, which provides similar protections.

[2] However, many settlement discussions cannot be introduced as evidence under rules of evidence. See Utah R. Evid. 408; Fed. R. Evid. 408.

Skoubye, Nielson, Johansen Attorneys Salt Lake City Utah

If you need help or would like to speak with an experienced attorney, please call 801-365-1030 or click here to contact us.