Many observers of class actions (including me) have promoted the use of mediators in negotiating class action settlements. Properly used, a mediator can not only help the sides reach agreement, but also document that the process underlying the settlement was fair, reasonable, and adequate.
Hamline Law School Professor James Coben has published an article taking a different view. In Creating a 21st Century Oligarchy: Judicial Abdication to Class Action Mediators, he worries that relying too much on mediators ignores the interests of absent class members just as much as potentially "collusive" settlements.
Coben's article is notable in no small part because it is a thorough examination of settlements that have used mediators, and opinions that have examined their role. His automatic suspicion of mediators (he tends to assume that all mediators are solely mercenary) may be a bit one-sided, but it does illuminate one of the areas where courts may not have considered the potential for conflict of interest. (After all, if the mediator is paid by the parties, and plaintiffs and defendants are repeat players, then it is possible the mediator will be willing to play up testimony about how sound a classwide settlement is.)
Professor Coben's primary objection is that
mediators routinely offer opinion about the merits of the settlement the mediators helped to broker.
According to Professor Coben, this kind of testimony (and the deference courts tend to show it) encourages a conflict of interest that harms the proposed class.
This recommended “strategic” use of mediator testimony promotes an alliance of the mediator and named parties – against outsiders – that is clearly at odds with the court’s duty to act as a fiduciary to protect the outsiders’ interests. It is especially troubling that such testimony is encouraged only in the face of class objections, rather than as a matter of routine in every case.
(Emphasis in original.) So what's the takeaway here? Mediation can still be enormously useful for resolving a class action. And, if properly briefed, the mediator can be an important ally. To that extent, Coben's article offers an idea of what best practices would look like for mediator affidavits.
As a result, when using a mediator, it may be worthwhile to consider waiving confidentiality to the extent that the mediator can testify to:
- the amount of time spent mediating;
- the level of agreement at the beginning of the mediation;
- and the degree to which the parties interacted directly during the mediation.
Mediators, like plaintiffs' counsel, defense counsel, and judges, are not perfect. Some will be conscientious and well-motivated, others lazy and self-dealing. Having a good process for using a mediator will help make sure one takes advantage of the upsides while minimizing the risks.