In a claim not seen often, a party to a mediation asked for sanctions for the other party’s failure to send someone with full settlement authority to the mediation. After Charles Leach died in his Tesla, which crashed and caught fire in 2021, his widow, on behalf of his estate, sued Tesla for wrongful death in a California federal court (Donna Leach v Tesla, U.S. District Court, Northern District of California, 2023). The case went to mediation in September 2024. The lawyers for Mr. Leach’s estate claim that the two sides reached a deal in mediation, only to learn, hours into the mediation, that the Tesla representative, a products liability lawyer, lacked the authority to approve a settlement on his own. At this point, the plaintiff claims, they had already provided Tesla with confidential information. The estate lawyers felt that they had no choice but to breach the settlement agreement. The estate then asked the court to award it $9,600 in legal fees as a sanction against Tesla. They argued that Tesla violated a court order in failing to send someone with full settlement authority, and that they wasted their time going to mediation.

The court ruled yesterday that the estate cannot pursue sanctions.

Michigan’s court rules on mediation require that the attorneys attending a mediation must have the authority necessary to participate fully in the proceeding. MCR 2.410(D)(1). The court rule does not specify penalties for failure to comply. Parties lacking full settlement authority can be a frustration to a mediation, and the threat of sanctions might be one way to address the problem. But there are other ways, including careful preparation beforehand.