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Labor, Employment and Benefits
Newsletter - September 2000
 
Court Imposes Sanctions Against Employer For Failure To Mediate In Good Faith
 
 September 11, 2000
 
Marilyn J. Holifield- Miami

Court-ordered mediation does not require settlement, but sanctions may be imposed if a court concludes that the mediation was not conducted in good faith. When counsel for Morgan’s Foods, Inc. told Plaintiff’s counsel “that he did not feel the mediation would be fruitful,” he had no hint that this was a first step toward an award of sanctions against him for failing to mediate in good faith.

In this lawsuit, Plaintiff, Gee Gee Nick, sued Morgan’s Foods alleging sexual harassment and retaliation in violation of Title VII. Although counsel for Morgan’s Foods had assured the court that Morgan’s Foods would discuss settlement in good faith, Morgan’s Foods failed to provide the mediator with a mediation memorandum and sent a regional manager to the mediation whose settlement authority was limited to $500. Only the general counsel, who was absent from the mediation, had authority to negotiate any settlement above $500.

In sanctions proceedings that pierced the confidentiality of what transpired in the mediation, it was confirmed that the Plaintiff made two offers of settlement. Morgan’s Foods rejected both without making a single counter-offer.

Counsel for Morgan’s Foods did not win any points with the court when its counsel told the court on separate occasions that, “the required mediation memorandum would have been a waste of time and money.” Rejecting Morgan’s Food’s contention, the court concluded that “Morgan’s Foods’ failure to prepare the memorandum was a waste of Plaintiff’s time, Plaintiff’s counsel’s time, the neutral’s time and the court’s time.” Awarding sanctions, the court concluded that Morgan’s Foods’ calculated failure to prepare a mediation memorandum was in direct violation of the court’s local rules.

The court expressed its ire at the limited settlement authority of the regional manager. In a rather lengthy discussion the court reminded counsel of its view that meaningful negotiations could not occur if the only person with authority to actually change his mind and negotiate was not present. The court flatly rejected the view that availability by telephone sufficed, noting that “the absent decision-maker does not have the full benefit of the mediation proceedings, the opposing party’s arguments and the neutral’s input.” The court determined that Morgan’s Foods’ lack of good faith participation in the mediation was calculated to save Morgan’s Foods a few hours of time in preparing the mediation memorandum and to save its general counsel the expense and inconvenience of a trip to attend the mediation.

Without offering substantively different arguments, Morgan’s Foods sought reconsideration of the sanctions award. The court determined that Morgan’s Foods’ arguments were frivolous and accomplished nothing but a vexatious increase in the cost of litigation, justifying the imposition of additional sanctions. In the event an employer believes mediation could not be fruitful in view of the frivolity of the Plaintiff’s claims, the court instructed that the proper course is to report this position to the court and request appropriate relief rather than willfully disobey a court order referring the case to mediation.

For more information please contact Marilyn J. Holifield at 1-888-688-8500 or at mholifie@hklaw.com.

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