Disclose Does Not Mean “Disqualified”

Mediators and arbitrators are required to disclose to potential parties any facts that might make them appear impartial. The arbitration statute in Michigan requires potential arbitrators to disclose “any known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator…” including a financial or personal interest in the outcome of the arbitration, or an existing or past relationship with any party, their counsel, a witness, or another arbitrator. MCL 691.1692. Mediators are required, pursuant to the Michigan Standards of Conduct for Mediators, to disclose conflicts of interest and grounds of bias or partiality reasonably known to the mediator. Standard III.C. A conflict of interest is defined as “a dealing or relationship that could reasonably be viewed as creating an impression of possible bias or as raising a question about the impartiality or self-interest on the part of the mediator.” Standard III.A. Michigan’s Standards of Conduct for Mediators are very similar to the Model Standards.

The paradigm is that the potential neutral discloses sources of possible bias, then the parties decide whether the connection disclosed is so tenuous as to be irrelevant, or so serious as to disqualify the person from serving as their neutral. In sum, the neutral’s job is to disclose; the parties’ job is to decide whether to appoint (or to remove, if the disclosure occurs when the process is already underway).

The Court of Appeals seems to have gotten this confused in an arbitration case, Wilson v Builders, unpublished per curiam opinion of the Michigan Court of Appeals, issued November 19, 2020 (Docket No. 351560). The case involved a construction dispute; each side was represented by counsel, and each side selected an arbitrator, then the local judge appointed the “neutral” arbitrator. The neutral arbitrator, Mr. Darbee, had a long-standing friendship with defendant builder’s attorney, Mr. Sheppard, which Mr. Darbee apparently failed to disclose. Over the previous ten years, they had frequently engaged in group lunches and occasional social events through the local bar association. They had gone together with a local orthodontist to a couple of college basketball games. Their paths had crossed when Darbee was on the municipal zoning board of appeals and Shepherd was city attorney. When Darbee had a dispute with his water bill, his attorney selected Shepherd as their neutral case evaluator. The two were rumored to have lunch together in local restaurants, and indeed, they lunched together during the arbitration proceedings.

The plaintiff evidently did not learn of any of this until after the award (he won, but he received less than a quarter what he had demanded). Plaintiff asked the trial court to vacate the award due to the arbitrator’s bias. He said he never would have agreed to Mr. Darbee had he known all this. The trial court refused, noting that Bay City was “a small community” where “lawyers rub shoulders and change sides on a daily basis,” concluding that Darbee was impartial. (Recall that the trial judge is the one who appointed Mr. Darbee to this panel.) The plaintiff appealed.

The Court of Appeals affirmed. The Court agreed that Arbitrator Darbee had a “relationship” with Attorney Sheppard, but determined that the “the type of relationship contemplated by the statute is one implicating a personal or financial interest, rather than the loose professional association between Darbee and Sheppard.” The court opined that interpreting the statute broadly to include professional relationships “would prohibit most attorneys from acting as arbitrators and would discourage attorneys from participating in bar events.”

No, it wouldn’t. All the statute requires is disclosure, not disqualification. Neutral discloses, parties decide. The plaintiff here might well have determined that, all things being equal, Mr. Darbee was still the best candidate for the job. But the plaintiff was deprived of the opportunity to make that decision.

In a twist of logic, the Court of Appeals says that the fact that the arbitrator had lunch with defense counsel during the proceedings is evidence that their association did not affect the arbitrator’s impartiality, because neither party objected. Impartiality is not proven by whether a party objected. If plaintiff’s counsel knew at the time the extent of their friendship, perhaps he would have objected. Lacking context, he may have decided to overlook this one incident to avoid jettisoning the arbitration. Far from being evidence of impartiality, it’s further evidence that there was a friendship here that should have been disclosed at the outset.

The Court of Appeals’ comments about how a broad interpretation of “relationship” would mean that no one in the bar could serve as a neutral are similar to the concerns expressed by the Attorney Discipline Board (ADB) in a case regarding a mediator’s failure to disclose a close friendship with one side’s attorney. The ADB worried that, “In the legal profession, an ‘appearance of conflict of interest’ can be found wherever anybody looks,” so requiring neutrals to disclose every connection would discourage the collegial relationships that enable attorneys to resolve their differences amiably.

The ADB, like the Court of Appeals, confuses disclosure with disqualification. In fact, following this logic, if all attorneys disclosed their relationships, they would all have the same “disadvantage” and the playing field would be leveled. The Court of Appeals almost sounds patronizing when it quotes the trial judge’s observation that “lawyers are able to separate themselves and act professionally and make professional decisions without being affected by personal relationships.” Both courts sound like they’re saying that attorneys don’t need to disclose friendships because they can be trusted to do the right thing.

No, they can’t, and that’s why we have rules compelling disclosure. Neutral discloses, parties decide.

Good advice on how to say sorry

I often blog about public apologies–the Washington Post’s list of top ten celebrity apologies for 2021 is a treasure trove–, but what we really all need help with are private apologies, the ones we need to make to friends and colleagues as we go through life. A podcast on NPR, “Life Kit: How to say sorry,” succinctly summarizes both what to say, and what not to say.

The advice comes from Harriet Lerner, a clinical psychologist who has written a book about apologies. First, some things not to do: no apology should contain the word “but,” an observation I learned from Peacemaker Ministries decades ago that bears repeating. She also discourages “over-apologizing,” making too big of a deal over a small offense. She reminds us not to make the apology about ourselves, and to listen deeply to the hurt party’s anger and pain so we can express how we understand the impact of what we’ve done.

“Understand that, for something serious, an apology is a long-distance run.” This a wonderful metaphor for the time it may take for an apology to take root. Indeed, this is why Peacemaker Ministries recommends that the final step of our apology is to “allow time.”

Indeed, the celebrity apologies fall short for some of the reasons Lerner identifies: the offender fails to acknowledge the offensive behavior, and/or the apology is addressed to “anyone I may have offended,” making the apology seem to blame the offended party/parties.

The main point is that it is difficult to do apologies well, and it’s worth it to take some time to think ahead about what to say, and what not to say.

Should Christian Organizations Use NDAs?

In my post dated November 27, 2021, I addressed some of the problems with Non-Disclosure Agreements (NDAs). In this post, I want to examine their role in the church. Many Christian organizations – churches, ministries, parachurch organizations – have resolved disputes with claimants by requiring them to sign an NDA. The same concerns about NDAs identified in secular settings pertain to the church – and there are other concerns as well. Should Christian organizations be using NDAs?

The biggest complaint about NDAs is that they permit abusers to keep abusing. In the church, a glaring example of this is the Catholic Church’s settlement of complaints about priests abusing minors, where victims or their families were required to sign an NDA in exchange for a financial settlement, then the bishop re-assigned the offender, who offended anew. The families were not permitted to complain or warn anyone, because they had signed an NDA. U.S. Catholic bishops reversed course in 2002, adopting a policy forbidding confidentiality and non-disclosure agreements in financial settlements unless the victim requested it. That left pre-2002 claimants uncertain as to whether they could speak up.

NDAs are still common on the Protestant side. An NDA featured prominently in the Ravi Zacharias scandal; a woman abused by him settled a lawsuit in 2017 that included an NDA that prohibited her from warning other victims. Although Ravi died in early 2020, his estate refused to release her from the NDA, preventing her from participating in the subsequent investigation into his widespread sexual abuse. It’s an example of the durability of these provisions – they can gag a party for life.

According to Christianity Today magazine, NDAs have been used by prominent churches and organizations to protect leaders accused of spiritual, sexual or other kinds of abuse, including Willow Creek, Mars Hill, Dave Ramsey Ministries, Cru, and Acts 29 (“NDAs Kept These Christians Silent. Now They’re Speaking Out Against Them,” July 7, 2021). CT reports that many churches and ministries have NDAs in their employee handbooks.

 

Has anyone thought biblically about NDAs?

There is certainly a place for confidentiality in the church. Proverbs 17:9 notes that it is loving to “cover over an offense,” whereas “whoever repeats the matter separates close friends.” But we are also exhorted to address sin (Matthew 18:15-17, Galatians 6:1, I Timothy 5:20). So if a church leader hears an accusation against a third party, should the church leader “cover over” the offense, or address it as sin? In order to determine whether there’s a sin that needs rebuke, it seems like the accusation at least deserves an investigation. When a church or ministry is sued, it naturally rushes to protect, and to be skeptical, if not dismissive, of the complaint. But at some point shouldn’t it do some serious self-examination as to whether there is any truth to the accusation? Christians of all people should be aware of our blind spots. Jesus warned us about neglecting the logs in our own eyes (Matthew 7:3). Are Christian defendants using NDAs as a way to avoid self-examination? “Those who conceal their sins do not prosper” (Proverbs 28:13).

There’s something troubling about promising never to mention a person’s bad behavior in exchange for money. This is, of course, how lawsuits are settled — parties agree to this to avoid a public trial where their own credibility and lifestyle will be challenged and exposed. But it shows how lawsuits are the wrong vehicle for addressing sin in the church. Paul warned Christians not to sue one another (I Corinthians 6:1-7), and now we see another reason why: when victims of abuse sue their offender, or his organization, the lawsuit is settled when the offender buys their victims’ silence.

NDAs also have the effect of compelling lying. An employee who is dismissed as a whistleblower and subsequently bound by an NDA is prohibited from telling potential employers the reason for leaving her previous employment. Either she gives the standard line, “I can’t talk about it” – words that are a red flag that she’s gagged by an NDA, and are not helpful to potential employers – or she says something untrue so as not to violate the NDA. Some NDAs prohibit disclosing that there’s an NDA, so the party can’t even explain why they can’t talk about it. If the offender leaves the church or ministry with an NDA in place, and a subsequent church or potential employer inquires about the person, the ministry cannot disclose the real reason for the person’s departure; that may not be lying, but it’s not telling the truth either.

There are also aspects of NDAs that could be unbiblical:

  • Preventing a party from discussing the matter with a counselor or therapist is contrary to Proverbs 11:14 and 15:22, which applaud consulting “a multitude of counselors.”
  • Preventing a party from discussing the matter with their spouse controverts Matthew 19:5-6, because the “two become one” in marriage.
  • Preventing a party from discussing the matter with their pastor or spiritual advisor hinders the very role of the pastor, deacon and overseer – see, e.g., I Timothy 4.
  • Extending the NDA beyond the life of one party, as in the Ravi Zacharias case, seems unconscionable; even that most sacred of covenants, marriage, terminates upon the death of one of the parties. Romans 7:2-3.

 

Banning NDAs

Because NDAs have been used to conceal abuse by pastors, missionaries and other church leaders, there is an effort in the church to ban them altogether. Calling themselves “#NDAfree,” this movement invites Christian organizations and churches to pledge “to be free from NDAs.” This may be difficult when an insurance company is involved, as insisting on an NDA may be its standard practice when it’s paying.

Another option would be for Christian parties simply to reduce the scope and extent of NDAs. Instead of unthinkingly following the world’s example, Christians ought to be leading the way in designing reasonable, caring provisions that strike the balance between maintaining needed confidentiality while respecting both parties.

NDAs are not “bad” or “wrong,” but they are fraught. Christians should be careful that they’re acting out of love, more than out of fear or self-protection, in using them.

 

Case Evaluation is Changing

The Michigan Supreme Court has adopted changes to the case evaluation process, over strong dissent.

Case evaluation is a settlement technique, perhaps unique to Michigan, where attorneys present summaries of their case to a panel of three disinterested attorneys who come up with a number (“award”) representing the panel’s determination of the case’s worth. That number is designed to give the parties a more realistic view of their case, and possibly a settlement figure. To incentivize parties to accept the case evaluation award, a party must pay sanctions if it rejects the case evaluation figure but obtains a judgment within ten percent of the case evaluation award. MCR 2.403.

Until 2000, this process was called “mediation.”

By statute, all medical malpractice cases as well as tort cases in which the claimed damages exceed $10,000 are subject to this process (still called “mediation” in the statutes). See MCL 600.4901 et seq.; MCL 600.4951 et seq. Many courts refer all their general civil cases to case evaluation.

When case evaluation was introduced to Michigan trial practice in the 1980s (having started in Detroit in the late 1970s), it was highly effective at settling cases. The acceptance rate was something like 80%. To hear seasoned practitioners tell it, that’s because the panels consisted of the leading litigators in their fields. It was hard to argue with the experts, who knew the likely verdict value of these cases better than anyone, because they tried these cases all the time.

But at least three things happened to change this. One is that the desire for panels with decades of experience meant that they were comprised of older white men; women and minorities were not getting appointed to panels. So the eligibility rules were relaxed to make it easier for newer attorneys to get appointed. Some practitioners will tell you that this fatally weakened the reliability of case evaluation awards, because the panels included people with as little as five years of trial experience.

Another change is simply fewer trials. It became increasingly difficult to predict the value of a case, because fewer went to verdict, and settlements are typically private. The panel’s award number seemed more arbitrary, less a prediction of what a court might award and more a number that the panel thought the parties might settle on. A third change in Michigan civil trial practice is the advent of mediation, enshrined in its own Court Rule, MCR 2.411, since 2000. Perhaps because the parties are present during mediation, it has become an effective case settlement process, reducing the need for case evaluation.

The result is that, in this century, the acceptance of case evaluation awards in some jurisdictions is below 15%. That’s not a very high rate for what is a rather complicated process that requires quite a bit of work on the part of court administrators. In fact, the 13th Circuit Court (Grand Traverse, Antrim and Benzie Counties) dispensed with mandatory case evaluation several years ago.

So the State Court Administrative Office has been exploring over the last ten years whether case evaluation should be altered or even dispensed with. In a 2011 study of more than 3,000 lawyers and judges, it found that case evaluation added several months to case disposition times, that a significant majority of lawyers felt the process was less valuable than mediation, and that judges rated the process more favorably than lawyers. In a 2018 follow-up study, support for case evaluation had eroded further. A follow-up survey recommended that case evaluation should become voluntary and that sanctions should be removed. (Supreme Court Order, p. 8)

A Case Evaluation Court Rules Review Committee convened by the State Court Administrative Office met in 2019 and recommended that the Court remove the sanction provisions, so that parties are not penalized for rejecting an award and proceeding to trial; and permit the parties to waive participation in case evaluation if they stipulate to another ADR process. The Supreme Court adopted these recommendations by order dated December 2, 2021.

But not without dissent. Justice Viviano, joined by Justice Zehra, opposed this move on several grounds. One is that, by permitting parties to opt out of case evaluation in favor of another ADR process, the court rule now conflicts with the statutes, which make case evaluation mandatory. Another is that many judges still believe that case evaluation, as is, is an effective method for resolving civil cases, especially when compared with the more expensive process of private mediation. The dissent also questioned whether now is the time to weaken case evaluation when many trial courts face a pandemic-induced backlog of cases.

Although some judges associations predict that these rule changes will add costs and cause significant delays in resolving cases, I suspect that trial practice will adapt to the new litigation landscape. Lawsuits do not need case evaluation in order to settle; they settle at high rates in states that do not have case evaluation. Cases settle because litigants prefer the certainty of a negotiated compromise over the risk of trial, and that has not changed.

Non-Disclosure Agreements: Are Mediators Unwittingly Perpetuating Abuse?

Non-Disclosure Agreements (NDAs) are contracts binding parties to keep quiet, often to keep quiet about their dispute and its settlement. NDAs have come under increasing scrutiny of late, because they have permitted wrongdoers to go on to harm others. One famous example is Hollywood producer Harvey Weinstein, who was sued several times for his sexual abuse, paid off his accusers privately in exchange for an NDA, then went on to abuse other women.

Of special concern is how NDAs have been used in the church to protect abusers, sexual and otherwise. The most famous are the cases in the Catholic church involving clergy abuse of minors, where families who sued had to sign an NDA in order to receive any monetary settlement from the church. Then, in many cases, the offender was re-assigned to another parish where he abused other children. The victims’ families were not permitted to complain or warn anyone, because they had signed an NDA; often, the NDA requires forfeiture of funds received if that party reveals anything. The role of NDAs in Christian cases will be addressed in a future blog post.

Also of special concern is the role that mediators play in facilitating an NDA as part of the settlement agreement. Do parties really know what they are agreeing to do? This post examines NDAs, then considers the role of mediators in facilitating them.

NDAs were developed by lawyers a few decades ago to protect trade secrets when an employee left a technology company. But now they’ve expanded into just about all employment separations and other legal settlements (“outcome NDAs”), and are often expected at the start of employment as well (“entry” or “preemptive” NDAs). An NDA is a confidentiality agreement; both parties mutually promise not to tell anyone else about information related to the dispute or its settlement. Plaintiffs agree to them because they don’t want a reputation as a troublemaker (whistleblower, accuser, etc.) while employers agree to them in order to protect valuable employees that may or may not be wrongdoers (sexual harasser, bully, racist, etc.).

NDAs can be very broad. They typically address:

  • Whom can be told – NDAs may prohibit disclosure to family members, to clergy, to therapists, as well as to former colleagues
  • What can be told – NDAs may prohibit disclosure of any information related to the other party (including information that had nothing to do with the dispute). They may prohibit disclosure of the existence of an NDA.
  • When it can be told – Some NDAs have no end date – they continue into perpetuity.
  • Consequences of disclosure — They may have a penalty clause, requiring payment if the party breaches the NDA, as a way to ensure that the party adheres to it.

NDAs help settle lawsuits, so they may be beneficial in some cases. But critics argue they are being used to protect abusers, hide wrongdoing, and hinder healing and reconciliation.

Criticism of NDAs

Protect Abusers: One obvious concern about NDAs is that they permit wrongdoers to abuse others. This has been revealed in the cases of Harvey Weinstein, of entertainer Bill Cosby, of ministry leader Ravi Zacharias, and in numerous cases involving Catholic priests. Employers argue that, unlike these cases, employers don’t always know whether the accused really is a problem or whether the claimant is truthful, so they need the NDA to protect them.

Re-victimize Victims: Lawyers sometimes encourage NDAs as a way for the plaintiff to get “closure” and move on. Dr. Julie Macfarlane, law professor at University of Windsor, vigorously rejects this, noting that “the threat of legal consequences of breaching the gag order hanging over the victim forever continuously revictimiz[es] them.” (“Buying Silence with a Bluff: How NDAs Exploit Litigants, With and Without Counsel,” Slaw online legal magazine, June 2021). This is especially true in cases where the NDA prohibits disclosure even to a spouse, minister or counselor, and when it extends into perpetuity.

Lack of Informed Consent: There may be a power imbalance in these cases, that leads to plaintiffs agreeing to an NDA without fully appreciating its ramifications. Even when parties are represented by lawyers, they are not always offered alternatives to an NDA, such as a one-sided confidentiality agreement that would protect the claimant but not the wrongdoer, or negotiating the terms of the NDA. Claimants who are not represented may believe the employer’s insistence that an NDA is the “only” way to settle their case; many claimants report feeling pressured into agreeing to the NDA.

Are NDAs enforceable? No one seems to know of a case where a court enforced an NDA in a settlement, beyond trade secrets. Like non-compete agreements, NDAs are more likely to be enforced if a court deems them “reasonable,” i.e., appropriately restrictive in time, geography and content. Not waiting for court decisions, several states have passed statutes in the last couple years prohibiting NDAs in cases involving sex harassment and discrimination, including California, Oregon, New York and New Jersey. Not willing to wait for a court determination or a statute, Prof. Macfarlane is encouraging a ban on NDAs with a campaign called “Can’t Buy My Silence.”

While Prof. Macfarlane maintains that the threat of having to sign an NDA inhibits victims from filing complaints, others suggest that they benefit complainants. Attorney Deborah Katz, who has represented “thousands” of sex harassment complainants, believes that because NDAs protect the privacy of companies, companies are more willing to negotiate with complainants and not force them to litigate.

 

Mediators facilitating NDAs

Are mediators unwittingly perpetuating abuse or its cover-up by facilitating NDAs? I know a mediator who facilitated an NDA in a whistleblower case, only to learn a couple years later that the whistleblower was indeed telling the truth about the CEO, who continued to inflict misery on people inside and outside the company. While mediators do not decide whether parties are being truthful, we are responsible for ensuring that each party has sufficient information to make good decisions. The first Standard of Conduct is for mediators to conduct the mediation “based on the principle of party self-determination, … in which each party makes free and informed choices…” (Standard I, Model Standards of Conduct for Mediators) This is especially important when a party is unrepresented. Claimants frequently report that they did not realize the implications or extent of the NDA, and/or did not know they had alternatives, even when they were represented. So, when an NDA is on the table, mediators may want to pay close attention to the client, to ensure they understand the full ramifications of all the terms of the NDA. Mediators unfamiliar with NDAs might accept attorneys’ insistence that this is the “only” or “standard” way to settle a case, so mediators need to do thorough reality-testing with the attorneys. Mediators can ask questions of both parties and counsel to elicit concerns and help negotiate terms, including considering confidentiality provisions less onerous than a full-fledged NDA. Mediators can caucus with both attorneys separate from the parties to reality-test the enforceability of NDAs.

Conclusion

NDAs, like other legal remedies, can be helpful but can also cause further damage. Mediators may want to take extra steps to ensure that the claimant personally understands all the long-term ramifications of an NDA, and possible alternatives, before agreeing to one.

The role of NDAs in Christian cases will be addressed in a future blog post.

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